LETTER 2801C

IRS Letter 2801C is a withholding compliance letter that the IRS sends to taxpayers who have claimed exempt status on their Form W-4 or who have claimed more dependents than they are allowed to claim. The letter informs the taxpayer that the IRS has overridden their withholding selections and that their employer will now withhold federal income tax at a higher rate.

There are a few reasons why taxpayers might receive IRS Letter 2801C:

• Claiming exempt status incorrectly. Taxpayers are only eligible to claim exempt status if they meet certain criteria, such as being a student or having very low income. If the IRS determines that a taxpayer is not eligible to claim exempt status, they will send them Letter 2801C.
• Claiming too many dependents. Taxpayers can claim one withholding allowance for themselves and each dependent they have. If the IRS determines that a taxpayer is claiming too many dependents, they will send them Letter 2801C.
• An employer error. Sometimes, employers make mistakes when processing Form W-4s. If an employer accidentally claims too many withholding allowances for a taxpayer, the IRS may send the taxpayer Letter 2801C.

If you receive IRS Letter 2801C, you have two options:

1. You can agree with the IRS’s determination. If you agree that you are not eligible to claim exempt status or that you have claimed too many dependents, you can simply ignore the letter. Your employer will automatically start withholding more federal income tax from your paycheck.
2. You can disagree with the IRS’s determination. If you disagree with the IRS’s determination, you can request a modification to the notice. To do this, you will need to submit a Form W-4 to the IRS and explain why you believe you are entitled to claim exempt status or a certain number of withholding allowances. You will also need to provide any supporting documentation, such as a copy of your birth certificate or your child’s Social Security card.

Here are a few tips for avoiding IRS Letter 2801C:

• Be accurate when filling out your Form W-4. Make sure to claim the correct exempt status and the correct number of dependents.
• Review your Form W-4 at least once a year. If your circumstances have changed, such as if you have gotten married, had a child, or lost a job, you may need to update your Form W-4.
• Keep a copy of your Form W-4 and any supporting documentation. This will help you if you ever need to request a modification to the notice.