What to Do if I Made a Mistake on My Tax Return

Realizing you’ve made a mistake in your tax return can feel daunting. Tax laws are often complex, and understanding them can feel difficult. However, you might not need to do anything depending on the type of mistake. If you need to file an amended return, this article explains what you should do to make the changes. You can also count on BC Tax services to make the process easier.

Common Types of Tax Filing Errors

Common mistakes on tax returns are quite simple and are usually not a cause for concern.

Here are things to watch out for:

• Misspelled names: Your name should appear the same way it’s written on your Social Security card.
• Inaccurate Social Security number (SSN): Just like your name, your SSN should match how it is on your Social Security card.
• Incorrect reporting: Forgetting to report income on tax returns can lead to incorrect reporting. Make sure you report your earned income, dividends and bank interest accurately.
• Missed credits or deductions: The calculations of your credits and deductions should be correct. You should also double-check where they appear on your final return.
• Erroneous bank account number: Check that you have the correct routing and account numbers to get your refunds smoothly.
• Incorrect filing status: Make sure you select the right filing status.
• Unsigned tax return: You should sign your tax returns, whether you file them in person or digitally. Unsigned tax returns are invalid unless you have a valid power of attorney.
• Early filing: If you process your tax return too early, you might miss including all proper tax reporting documents, leading to inaccuracies.

What to Do if You Made a Mistake on Your Tax Return

If your mistakes are due to math errors, you don’t need to amend your tax return as the Internal Revenue Service (IRS) automatically corrects them. If you’ve forgotten to attach forms like a W-2, wait for the IRS to request the forms from you. For other mistakes, you can file Form 1040-X electronically or through paper filing. You must file the form separately for each tax year.

If the IRS automatically corrected the mistakes, you’ll receive a CP12 or CP22 notice. CP12 means you’re due for a refund or that the IRS updated your original refund amount. CP22 means you owe taxes. If your refund changed, you don’t need to take action. If you owe taxes, pay by the due date indicated in your notice. If you disagree with the changes, contact the IRS.

How to Amend a Federal Tax Return

To file a 1040-X and amend your federal tax return, you’ll need:

• Any IRS notice regarding adjustments to your tax return
• Instructions for Form 1040
• A copy of your original tax return with supporting forms, schedules and worksheets
• Additional supporting forms, schedules and worksheets to show your changes
• A new Form 1040, if necessary

Fill out Form 1040-X and include the explanation for your changes. You should attach all other appropriate forms and schedules when you submit the amendment. If you’re amending your federal tax return, you may need to do the same for your state return.

How Long Does It Take the IRS to Fix an Error?

The IRS can process your Form 1040-X in around eight to 16 weeks. Paper filing can take up to three weeks for the form to show up in the IRS system. You can visit Where’s My Amended Return to track the status of your amendment.

Penalties and Interests for Tax Return Mistakes

Claiming a credit or refund for more than the appropriate amount will cost you 20% of the excess amount. Frivolous tax returns — returns that are substantially incorrect or don’t contain essential information — will cost you $5,000.

The IRS will also charge you interest on penalties for:

• Reportable transaction understatements
• Substantial valuation misstatements
• Substantial understatements
• Negligence
• Fraud

You must pay additional taxes due within 21 days from the date of notice or 10 business days if the amount is $100,000 or more. Late payments will cost you between half of 1% and 25% of the unpaid amount.

You can avoid penalties by providing a reasonable cause for why you didn’t pay your tax on time. If the IRS charges you a penalty for nonpayment or underpayment, BC Tax can negotiate on your behalf and request a tax penalty abatement.

Frequently Asked Questions About Tax Return Errors

Answers to the common questions may help with your confusion on what to do and how to avoid mistakes in the future.

Can I Get in Trouble if My Tax Preparer Made a Mistake?

You won’t get in trouble if the mistake can be resolved by amending your tax return. However, you may be susceptible to interest and penalties. If you believe your tax preparer did not make a mistake and intentionally performed malpractice, you can report them to the IRS. You should always review your tax returns carefully before signing.

Does the IRS Forgive Honest Mistakes?

The IRS can remove or reduce penalties if you provide a good reason for failing to meet your tax obligations. However, they can’t remove interests unless the penalties are removed.

How Likely Is the IRS to Catch a Mistake?

The IRS can easily track mistakes on your income, interest, dividends and expenses with the help of their Information Returns Processing System. This system matches the information the IRS receives from employers and third parties to what you report on your tax return.

The IRS does not disclose the extent of its means to investigate companies flagged for an audit. Some believe the IRS tracks credit card transactions and social media profiles to see if the information aligns with the tax returns. If your company gets flagged for an audit, BC tax can make this process stress-free through our Tax Audit Representation services.

Can You File Taxes Late Without an Extension When Amending?

You can file for an amended tax return after filing your original return. If your concern is regarding credit or refund, you should file Form 1040-X within three years, including extensions, or within two years after you’ve paid your tax. If you owe an additional tax from the amended return, you can avoid penalties if you pay the amount by the filing due date. When you file an amended return after the due date, don’t include interest or penalties, as the IRS will adjust them accordingly.

Get Expert Help From BC Tax for Tax Return Corrections

The IRS has specific, line-by-line instructions on how to fill out Form 1040-X correctly. The instructions can get confusing if you’re amending mistakes for the first time. BC Tax is a tax consultation agency that can help you correct the errors, so let us take the weight off your shoulders. You’ll get customized solutions based on your needs. Plus, we offer a free, no-obligation consultation with a 15-day cancellation period. Talk to us today to get started!