In 2000, Thomas Jones received $19,500 in social security benefits and $22,324 in disability payments from an insurance company. He did not file a tax return for 2000. Jones received a W-2 for the disability payment but thought it was exempt from tax. The IRS also received a copy of the W-2 and tried to match the W-2 to Jones’s tax return. With no return filed, the W-2 matched nothing. Presto! The IRS is looking at Mr. Jones.

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