What Happens If You Make a Mistake on Your Taxes

Americans filed over 150 million individual tax returns for the 2018 tax year. Tax season is a nerve-wracking time for many American filers who are bound to make mistakes on their returns. The good news is that there’s a process for correcting your mistakes and setting your tax records straight.

If you’re one of these stressed filers, you can learn more here on what happens if you make a mistake on your taxes. Take a few deep breaths and find comfort in knowing that you can correct your problems today.

Common Errors

Most taxpayers file their returns without the help of a professional. This may help save an accountant or tax professional fees in the short run. But if you aren’t a professional tax preparer, you might make errors or run into tax problems.

Here are just a few of the most common mistakes the IRS finds on tax returns:

Transposing Numbers/Math Errors

If you were never really a “numbers person” then you’ll be even more challenged with the heavy math and identification number demands that the IRS needs on your forms. Many errors include simple arithmetic mistakes where filers should be adding instead of subtracting.

It’s also easy to accidentally transpose bank account or social security numbers. If a filer has many dependents to list (who also have their own social security numbers) this is easy territory to accidentally list numbers incorrectly. If you have the wrong bank account listed, any possible tax refunds coming your way will disappear.

Another common error is not correctly copying the figures from your 1099 or W-2 to your 1040 form. With those walls of numbers, it’s easy to accidentally transpose an amount like $26,114 into $26,411. The IRS compares your tax form with their copies of these same forms and will red flag any discrepancies.

Incorrectly Claiming Child Dependents

Another common mistake on a tax return is incorrectly claiming a child as a dependent. Parents who don’t file their taxes together can’t both claim the child as their dependent. The parent who has the child live with them for over six months of the year can claim them as a dependent, not both parents.

Children 19 years old or younger can count as dependents. If you or your ex-spouse have questions on claiming child tax credits, the IRS “tie-breaker rules” can guide you on the correct process to follow.

Filing a Paper Return

Paper tax returns receive more IRS scrutiny than their electronically submitted counterparts. Paper returns tend to be touched by more human hands when the information is entered into the IRS record systems. This creates more opportunities for mistakes to occur.

Incorrectly Claiming Income Sources

Taxable income isn’t only reported on a 1099 or W-2 form. Taxpayers should also claim income received from gambling or lottery winnings as well as other side jobs worked.

What Happens If You Make a Mistake on Your Taxes?

The good news is that most returns that have mistakes on them usually don’t result in a tax audit. The IRS is more than happy to meet you halfway to correct those smaller, minor mistakes. For example, if the IRS notices your simple addition or subtraction errors, they will fix them for you

For those bigger errors that they can’t fix, the IRS uses four different methods to contact a taxpayer about their tax return errors. First, the IRS will ask you, in writing, to correct your submitted return. An IRS representative may also call you and offer a 30-day deadline for you to fix your paperwork.

Sometimes these IRS phone agents might even offer their assistance over the phone to help you correct your return.

Process for Filing an Amended Return

If you need to make changes after your original return has been filed, you file what’s called an amended tax return. Form 1040x is the official form to use to input the correct figures as well as explain why you want to change what you reported on your original filing.

After you complete form 1040x, be sure to attach the following materials to back up your statements on the amended return. These materials include:

  • Form CP2000 if the IRS notified you that your federal return needs revisions
  • Copies of the bank slip showing your federal refund deposits
  • Copies of your 1099 or W-2 forms you submitted with your initial return and
  • Any other backup documentation that supports your request to amend your return

Once your form 1040x is complete and your backup materials assembled, print it out and mail it to the IRS. You’ll need to submit a hardcopy of these materials, even if your original return was e-filed.

Deadlines for Filing a Form 1040X

You can file your amended return within three years of your original return file date. Your deadline to amend becomes three years after April 15th. If you received an extension from the IRS to submit your return, then you have three years from that day to file an amended return.

Next Steps

Do you think an amended tax return is in your future? If your mistake means you owe more taxes, be sure to file your amendment immediately so that you can avoid any penalties further down the road. Download form 1040x and collect copies of your W-2 and 1099 forms to corroborate your figures.

If your mistake means you’re now eligible for a higher refund, wait until you’ve received the funds from the initial return. Once you have them, you can file your amendment to correct those errors in your favor.

Don’t forget to check out our website for more helpful advice on what happens if you make a mistake on your taxes. Rest easy in knowing that there is a process in case you goof up this important citizen’s responsibility.

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