Lunch With a Friend

My friend and I were catching up over lunch. She explained to me that the IRS had sent her a letter stating she did not report a rather large sum of money on her taxes last year. Come to find out, she never worked for the company nor had ever heard of them. Although it caused a lot of stress for her, we both concluded that it was a mistake.

The IRS works on a “matching” system. For example, if you are a business owner and you hire an employee, at the end of the year you fill out a W-2 for that particular worker and send a copy to the IRS and the employee. When the employee files their individual return, the IRS is looking to “match” the W-2 filed by the business and the W-2 filed by the individual. If they do not match, it sends up red flags in their system. Hence why my friend received the letter.