Tax Answers
Answers to the tax questions our clients ask most
Written by Enrolled Agents in Ogden and Midway, Utah. General information, not advice for your situation.
IRS notices and letters
- What is an IRS CP2000 notice?A CP2000 says the income on your return does not match what employers, banks or brokers reported to the IRS. It is a proposal, not a final bill.
- What do IRS notices CP14, CP501, CP503 and CP504 mean?They are the balance-due notices in order. CP14 is the first bill. CP504 is a notice of intent to levy and needs action right away.
- I got a final notice of intent to levy. What happens now?Letter LT11 or Letter 1058 means the IRS can levy wages or bank accounts after 30 days. You have 30 days to request a Collection Due Process hearing.
- Should I call the IRS myself about a notice?You can, but anything you say can be used, and hold times are long. An Enrolled Agent can call on your behalf with a power of attorney.
Back taxes and payment plans
- What IRS payment plan options are there?Short-term plans give up to 180 days to pay. Long-term installment agreements spread the balance over monthly payments. Interest keeps running on both.
- What is an offer in compromise, and do I qualify?An offer in compromise settles tax debt for less than the full amount when the IRS agrees you cannot pay it all. Most applicants do not qualify, so screen first.
- Can IRS penalties be removed?Often, yes. First-time penalty abatement removes failure-to-file and failure-to-pay penalties for one year if your record for the prior three years is clean.
- I have not filed in years. How many years do I need to file?The IRS generally asks for the last six years to bring you into compliance. Filing before the IRS contacts you gives you more options.
Small business and S corps
- Should my LLC elect to be taxed as an S corp?Sometimes. An S corp can lower self-employment tax on profits above a reasonable salary, but it adds payroll, a separate return and higher costs.
- What counts as a reasonable salary for an S corp owner?Roughly what you would have to pay someone else to do your job. Too low invites IRS scrutiny; too high wastes the S corp benefit.
- Do I need to pay quarterly estimated taxes?If you are self-employed or have income without withholding, usually yes. Payments are due in April, June, September and January.
- When do I have to send a contractor a 1099-NEC?For payments made in 2025, at $600 or more. For payments made in 2026 and later, the threshold rises to $2,000, adjusted for inflation starting in 2027.
- Why should I keep my books monthly instead of at year end?Monthly books catch errors while they are fixable, support quarterly tax estimates, and make the year-end return faster and cheaper.
- Can I take a home office deduction?If you are self-employed and use part of your home regularly and exclusively for business, yes. W-2 employees generally cannot.
Utah taxes
- Does Utah give an automatic extension to file?Yes. Utah grants an automatic six-month extension to file, but it does not extend the time to pay. Prepay enough by the April deadline to avoid the extension penalty.
- What is Utah's pass-through entity tax election?It lets an S corp or partnership pay Utah income tax at the entity level, which can work around the federal cap on state and local tax deductions.
- Does my multi-member LLC have to file a Utah TC-65?Usually. A partnership or LLC taxed as a partnership files Form TC-65, with one exception for entities whose members are all Utah resident individuals.
Individual returns and records
- What documents do I need for my tax return?Income forms, records for deductions and credits, last year's return, and IDs. Our free 2026 Tax Document Checklist lists everything.
- How long should I keep tax records?At least three years after filing for most records, longer in some cases. Keep property and investment basis records until you sell and then some.
- How do I fix a mistake on a return I already filed?File an amended return on Form 1040-X, usually within three years of the original filing date to claim a refund.
- What is the difference between an Enrolled Agent and a CPA?Enrolled Agents are licensed by the IRS and specialize in tax. CPAs are licensed by states and cover accounting and auditing more broadly. Both can represent you before the IRS.
- Does a tax extension give me more time to pay?No. An extension moves the filing deadline to October 15, but tax is still due in April. Interest and penalties apply to anything paid late.
Life events
- Do I pay tax when I sell my home?Often not. If you owned and lived in the home for two of the last five years, up to $250,000 of gain ($500,000 for married couples filing jointly) is excluded.
- How does depreciation work on a rental property?Residential rental buildings are depreciated over 27.5 years. Depreciation lowers tax each year but is partly taxed back when you sell.
- How do I file my taxes during or after a divorce?Your status on December 31 controls the whole year. If the divorce is not final by then, you file as married, jointly or separately.
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