CP24 Notice: Estimated Tax Payments Changed and You Have a Credit

A CP24 is the mirror image of a CP23. The IRS found that the estimated tax payments on your return did not match the payments it had posted to your account, corrected the return, and as a result you may have a credit. Because the news looks good, people sometimes skip the details. That can be a mistake, especially if you made no estimated payments at all.

Why the IRS sent it

The IRS compared the estimated payment figure on your return with the payments it recorded. Where the IRS found more than you claimed, it increased the credit. The notice may also reflect other changes made while processing your return. Read the "What we changed on your return" section to see each line.

What if you made no estimated payments?

This is the question the IRS addresses directly. Common explanations include:

• An incorrect entry on the estimated tax payments line of your return, such as a withholding or refund-applied figure placed on the wrong line.
• A payment posted to your account in error, for example one made under the wrong taxpayer number.

If a payment you did not make appears on your account, call the IRS and have your return and supporting documents, such as cancelled checks or an amended return, ready. The IRS says you must return any refund sent by mistake. See Topic 161 on the IRS site. If you suspect someone used your taxpayer number, read about identity theft and the IRS.

If you believe a payment was misapplied or never credited

Call with your return and documentation. The IRS will discuss the issue and give instructions. A bank statement, a confirmation number or a copy of the front and back of a cancelled check help. Never send original documents.

If you agree

You do not need to reply. Correct your own copy of the return for your records but do not send it. Track your refund with the IRS refund tools. If you have another tax debt, the refund may be reduced or offset, which would be explained in a separate notice. See CP49.

If you disagree

Contact the IRS at the phone number on the notice by the date stated. If the problem is a further correction to your return, file Form 1040-X, and the IRS recommends this route for other mistakes. See amended returns.

Example (hypothetical)

A taxpayer pays $2,000 of estimated tax in the first quarter and $2,000 in the second. The return lists only $2,000. The IRS sees $4,000 and raises the credit by $2,000 on the CP24. The taxpayer agrees. Had the taxpayer paid only $2,000 in total, the notice would point to a misapplied payment that needs attention, because the IRS can ask for money back if it sent a refund that was not due.

Estimated tax penalty

If you did not pay enough tax during the year through withholding or estimated payments, the IRS may assess an estimated tax penalty. See estimated tax penalty and estimated taxes. Use Form 1040-ES and Publication 505 to adjust payments for the coming year. A CP24 does not itself state a penalty.

Common mistakes

• Treating a larger credit as a windfall without confirming the payments.
• Entering withholding on the estimated payments line.
• Not recording estimated payments at the time of payment, and not checking your online account before you file, as the IRS recommends.
• Sending the IRS a corrected copy of the return.
• Ignoring the date because you agree. If something is wrong, say so before the date passes.

When to involve a CPA

Talk to a CPA if you did not make the payments the IRS credited, if a spouse or business also pays estimates, or if the credit seems too good to be true. We can obtain transcripts, compare them with your records and, with a signed Form 2848, contact the IRS for you.

How we can help

We can review the CP24, check what the IRS posted, and correct the return or prepare a response if needed. See our IRS representation services or contact us.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.