Here Is What Happens When You Make a Tax Filing Error and How to Resolve
Making a tax filing error can easily make you panic. You may think that committing a mistake in your personal, income, or tax credit information will cause issues. However, this is not true, as it is not the first of its kind. There is no need to panic as they can be resolved. In fact, these mistakes are so relatively common that the IRS has a process to fix them.
If you are still unsure how to handle your tax errors, below are how to correct them and what to look out for.
What If I Filed My Taxes Wrong?
Some common errors in a tax filing that people commit include mathematical mistakes, forgetting the signature, skipping deduction details, and mishandling personal records. Regardless of the issue, you can have it corrected.
For example, if you often donate to charity, you must declare this in your tax returns. Forgetting or not keeping tabs on the receipts may result in tax filing issues. These receipts will help track the deductions from your income and qualify you for deductions on your tax returns.
Another major and common tax filing error is underreporting your income. If you fail to report all your income, eventually the IRS will catch any mismatches with the information you report and this may lead to serious consequences, such as penalties.
However, you can have these fixed, though it is still best to stay on the safe side and minimize these issues. If it does happen, don’t panic; there are solutions that can help.
6 Steps You Should Take to Correct Your Tax Filing Error
This section tackles the different steps you can take to fix your tax filing errors and the documents you may need to collect or prepare.
1. Do not panic
One of the usual things people do when faced with a tax problem is panic. It is easier said than done, but you need to keep calm even if you find that you committed a tax filing error. The IRS can catch the issue themselves and correct it quite easily.
If you think you committed a grave error, there are IRS tools that you can use. You can visit the interactive tax questionnaire the IRS has provided to assess if your situation needs further action from you. This process will determine if you need to file an amended return, and if you do, you have three years to do it, so you have enough time.
2. IRS will fix it if it is just a simple math error
Math errors are inevitable when there are numbers involved. You may have encountered them yourself at some point. This error is not major, and the IRS can handle simple issues like this. They will double- or triple-check the forms you submitted to ensure that your calculations are correct. The process involves gathering several copies of your tax forms, which the IRS can detect immediately.
To avoid these errors, always do a final review. If you have an accountant who files your tax returns, you should still review them, even triple-checking if necessary.
3. IRS will reach out for missing documents
With the intricacies of the tax filing process, forgetting to include a document is typical. Check if you have all the necessary documents. If you are missing any of these, the IRS will reach out to you.
- Forms W-2 Wage and Tax Statement
- Form 1099-MISC Miscellaneous Income
- Form 1099-INT Interest Income
- Form 1099-NEC Nonemployee Compensation
- Form 1099-G Certain Government Payments, like unemployment compensation or state tax refund
4. File an amended return
If you think you committed a significant error on your tax deductions, tax credits, or elsewhere on your return, it may be best that you file an amended return. Assess your situation better with the IRS tool that allows you to fill out a questionnaire with the help of a virtual assistant. This can be useful to you before you proceed. Additionally, you can fill out Form 1040-X to correct any omissions or misinterpretations.
5. You might face a penalty if you underpaid your tax
Remember, if you forget to report other sources of income, you may need to file an amended return. An example will be if you have a part-time job. If you fail to include this in your tax return, you may face a penalty.
6. Work with a tax professional
Working with a tax professional can be a good option if you want to go the extra mile with securing an error-free tax filing. Having a tax expert means someone can remind you of your requirements and help with any issues you encounter. You may also want to have a tax professional’s help if the process is too complicated for you or there is more money involved.
Do Not Stress Over It
Tax filing issues can be corrected. Of course, it is still better to minimize your mistakes to avoid any inconveniences and penalties. However, if any problems do arise, do not panic. If you think you committed a grave error, you can approach a tax professional to help you out. Consider getting a tax resolution partner like Tax Samaritan that offers best-in-class service.
All About Randall Brody
Randall is the Founder of Tax Samaritan, a boutique firm specializing in the preparation of taxes and the resolution of tax problems for Americans living abroad, as well as the other unique tax issues that apply to taxpayers. Here, they help taxpayers save money on their tax returns.