I got a notice from IRS saying that I didn't report my unemployment income and some small interests from my savings account (I'm in the US). I was unemployed for 4 months in 2018 (in Texas) and I didn't know that's also taxable and never received a W2 for that. Now for a 6K income difference, they are asking almost $1800 back and need to pay them. It also includes some 90$ interest.

Is that really accurate? What are my options? Can I negotiate with them? Any experience or advice would definitely help. This is a lot of money for me :(

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  • 4
    All else aside, the arithmetic is correct. You'd be in the 24% tax bracket in 2018, and 1,668 is 24% of 6,957 (the marginal income you did not declare).
    – D Stanley
    Commented Mar 31, 2020 at 15:34
  • Yes I just re-calculated with TurboTax and number looks correct, unfortunately. I hope I can just get the interest waived.
    – Tina J
    Commented Mar 31, 2020 at 18:27
  • The UI office is only obliged to mail your 1099 to the mailing address that they are aware of. Typically people move, and send out change of address to the usual suspects, and those state agencies always get forgotten. So go back to all those entities and either ask them to re-mail the 1099 or download e-versions (every bank does this). Then double-check IRS's figures. . Commented Mar 31, 2020 at 21:48
  • Can I make the payment online? Not mailing a check?
    – Tina J
    Commented Mar 31, 2020 at 22:05
  • 2
    If they sent you a letter on it, they're usually not wrong. They are sometimes, but they're usually not. While the US tax code is pretty complicated, most things are actually pretty straightforward, there's just a lot of exceptions here and there.
    – corsiKa
    Commented Mar 31, 2020 at 22:43

6 Answers 6


Is that really accurate?

You need to find the 1099-G forms that you should have received from the state. It is possible that it didn't get to you because in another question from a year ago you mentioned that you worked in several states. The IRS did get a copy of the 1099-G and are now reconciling all the forms they received with the SSN numbers to make sure all the income they know about is accounted for.

Your question also mentions a small amount of interest from your savings account. The IRS form mentions that you failed to report over $1,000 in interest. That means that the IRS has found banks reporting that interest. You will need to find the 1099-INT forms from those banks, or the bank statements, or check online to see if those numbers are accurate. It is possible that number is too high, or it is too low, or it is exact. Note even if a bank doesn't send you a 1099, you still have to report it on your tax return.

What are my options?

Double check their numbers. They might be wrong. Also this might only be the start of the process if there is more income to find.

Then contact them using the methods they mention in the notice.

Can I negotiate with them?

They might give you time to pay the bill. But expect that you will probably end up paying all of it back.

If you haven't filed your 2019 return, then double check everything. Account for all income. Do the same if you already filed, even if that means you have to file an amended return.


Yes, unemployment is taxable. You didn't specify a state, so here's what Maryland says:

  1. Are unemployment insurance payments taxable? Yes. Any unemployment insurance benefits that you receive must be reported as part of your gross income for both state and federal tax purposes. To assist you in filing your tax returns, we will send you an IRS Form 1099-G showing the total amount of unemployment insurance benefits paid to you during the previous year. You may elect to have taxes deducted from unemployment insurance payments. You can choose to have either Federal taxes, Maryland state taxes, both or neither deducted from your payment. You must sign and return the W-4 form to us before any taxes can be withheld from your unemployment insurance benefits.

As for what you can do. You can call the IRS (look up their number online - irs.gov) and ask what accepting the penalty would entail, how to set up a payment plan, and whether they would be willing to waive penalties and interest.

  • IRS can waive (technically, abate) most penalties for reasonable cause, and some even without, but there are no penalties in this case -- only tax and interest. By law they cannot waive interest except in some very limited cases, like combat zone deployment. Commented Apr 1, 2020 at 6:18

Is that really accurate?

Your sheet shows an income that would put you in the 24% marginal tax bracket in 2018

The tax is $1668 on almost $7000 of taxable income, not $6000. That is 24%. The extra $89 interest. So yes, it is accurate.

You seem to not be disputing the unemployment payment amount. Is the interest income accurate, about $1000?


The other answers have addressed whether and how "is that [tax] really accurate".

As to "what are my options" and more concretely "Can I make the payment online?":

YES -- the IRS makes it as easy as they can for you to pay them. (Gee, I wonder why they would want that.) The nav bar at the top of every page on their website has a prominent link to https://www.irs.gov/payments which is the place to start. But notice they do want you to mail the response form to agree to their 'proposed' change (which isn't officially an assessment until either you agree, or they go through certain legal procedures) so it wouldn't cost extra to include a check in that envelope. I'm surprised it's only 15 days to their proposed action date; notices like this are supposed to allow at least 30 days. Quite possibly some of their processing got delayed or messed up by the pandemic situation. In principle you could fight over this procedural lapse, but if you determine you do owe the tax I don't think it's worth it. (If you don't owe the tax -- i.e. their figures are wrong -- I would definitely fight for that.)


  • you can pay by direct debit -- if you have the money available. Note the notice said it isn't due until April 15, so you have that long to get the money available without doing anything special at all. And given the current situation I'd bet if you 'full' pay a week or two late they'll accept it as within tolerance. You may well get your $1200 check (if eligible) by April 15 and you could just use that money :-)

  • you can pay by credit card -- via a contractor, who charges a few percent extra. Basically this is the 'merchant discount' that a private company would pay to accept card payments, but as a Federal agency the IRS isn't allowed to do that so they make you pay it for them. This gets the IRS off your back, but puts you in debt to the credit card issuer, the disadvantages of which are detailed in many other money.SX questions.

  • you can pay by debit card, similarly -- but that normally requires you to have the money in your bank account, so it costs (a little) more than direct debit without any advantage.

Using the link at the right of the page:

  • you can get a 'free' 120-day delay, during which they only charge interest. If that's long enough for you to get the money available, this is a decent deal. However in the current situation, many things that are normally easy or certain aren't, so judge for yourself.

  • since you're under $50k (and even under $25k), you are automatically eligible for an installment agreement that lets you pay over a period of several years -- I believe at least 3 years in all cases, and up to 6 years in some (according to NTA). There is a setup fee, which is minimized if you apply on the website (rather than phone, mail, or fax, which requires them to have a person work on it) and pay by direct debit. I'd recommend using the website for the cost savings even under normal circumstances, and even more now when phone 'assistors' are likely to be way overloaded, and mail backlogged even worse than usual. You will have to pay interest -- but at the Treasury market (rounded) plus 3%; you won't get any credit card or unsecured loan that low, and even if you can find someone to process a HELOC or similar now I doubt it will be better.

Cheer, FWIW.


I am not familiar with US tax system but my general advice is to call IRS using number from a reliable source and ask them. The interest penalty is usually non negotiable but it makes no harm to just ask. If the notice is real I suggest you pay the amount within the due date to avoid additional interest.

  • The design language of that letter "looks legit". So it's either IRS or a very careful scammer. Since the facts correspond to OP's reality, it's either IRS or a very careful, very lucky scammer. Commented Mar 31, 2020 at 21:42

Is that really accurate? What are my options?

The only people who can definitively answer both of these question are the IRS. You should look up the nearest office at https://www.irs.gov/help/contact-your-local-irs-office

They will have copies of all the documents so you can double check their work on your own. I'd HIGHLY RECOMMEND paying this. File an amendment for a refund once the IRS is off your case.

Now for a 6K income difference, they are asking almost $1800 back and need to pay them.

That actually sounds about right. 6000 * 30% = 1800. I'm going to guess this was actually the 24% bracket with some interest and fees thrown in.


Unless you're going to be destitute or homeless, pay the IRS NOW! Don't nickel and dime them over fees. Owning to the IRS is not a normal debt. The IRS can place liens, garnish wages and seize assets without a judgment, and that is when they are being nice.

  • Can they waive the interest at least? Looks like all phone numbers are out of service.
    – Tina J
    Commented Apr 2, 2020 at 16:28
  • I'm thinking to deduct the 90$ interest and pay the rest.
    – Tina J
    Commented Apr 2, 2020 at 16:29
  • 1
    @TinaJ - The IRS really likes to get paid. Do you really need the $90 that badly? The IRS is not a company, they don't care if you hate them (in fact, most people do). They care about bringing in every cent they are legally allowed to tax you. They will happily spend way more than they $90 you didn't give them to make an example out of you and make sure you pay correctly next time. Make an appointment ASAP - your best bet is to be really nice to the agent and maybe they'll waive some fees. Commented Apr 2, 2020 at 16:45

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