What to Do if You Make an Error on Your Tax Return

Use these links to jump to different sections:

• Common Tax Return Errors
• What Happens if You Make a Mistake on Your Tax Return?
• Consequences of Not Fixing Tax Errors
• Can You File an Amended Tax Return if You Made an Error?
• The Process of Fixing a Tax Error
• Do You Need a Tax Lawyer to Fix Tax Errors?
• Consult With a Tax Attorney

Each year, millions of Americans must decide how to prepare and submit their annual tax returns. Some prefer to work with a tax professional, such as an accountant, or a tax service like H&R Block. For others, they prefer to do their own taxes. They may fill out paper forms, mail a packet, or use tax software like TurboTax to e-file. Preparing your own taxes can be convenient, but some risks come with it. Without the guidance of a tax expert, filers are at greater risk of making mistakes.

Common Tax Return Errors

The most common tax return error is mathematical. These human errors happen because people enter the wrong numbers or make a mistake when doing calculations. Another common mistake is leaving off or entering the wrong information.

Examples include entering the wrong social security number or choosing the wrong filing status. It could also be as simple as forgetting to sign the tax return before submitting it. Other common tax return errors include:

• Errors in income reporting
• Incorrect bank account/direct deposit information
• Incorrectly claiming dependents
• Incorrectly claiming deductions
• Incorrectly claiming tax credits
• Incorrectly claiming the Child Tax Credit
• Incorrect bank account/direct deposit information

With more people operating side hustles, small business tax filing mistakes have also increased. Many people do not realize they must claim their income because it qualifies as a small business. They also claim incorrect business deductions.

There is also the issue of state and federal laws changing in response to changing economic and world conditions. For example, the COVID-19 pandemic completely changed the employment landscape, with more people working remotely than ever before. This led to many states changing their laws on income taxes. “But one of the biggest issues that I actually have been seeing is because of these changes of the rules, it created confusion, and people don’t always report it [their income] correctly,” says Zhanna Ziering, a top-rated tax attorney in New York City for Moore Tax Law Group.

What Happens if You Make a Mistake on Your Tax Return?

Tax return mistakes are a common thing that happens. The Internal Revenue Service IRS is adept at catching them. For glaringly obvious mistakes, your tax return may get rejected. The e-file system will automatically reject the return and send an error code. You will get a notice from the IRS that you need to make corrections and resubmit. The IRS.gov website has a tool that walks taxpayers through common mistakes to make correcting their returns easier. This typically happens when people forget to sign their tax return or enter an incorrect social security number.

If your return is not rejected, the IRS may make the necessary corrections for you. This can happen when you make a miscalculation. The IRS will do its own math and send you a written notice of the correct amounts. You will receive a letter in the mail outlining the corrections made and the results of those corrections. The IRS will never call or email you with this information.

There are a few possible outcomes depending on the mistake and IRS determination. The IRS may tell you that you owe additional taxes. If this is the case, you will need to make an additional payment or request a payment plan. The IRS could decide that you are owed an additional tax refund. If so, the IRS will make an additional payment to you. There is also the possibility of no change, in which case, nothing changes. If you disagree with the IRS, you can appeal the determination. The letter will outline the steps necessary to do this and how long you have to appeal.

Consequences of Not Fixing Tax Errors

If taxpayers fail to correct their tax returns, they face several possible consequences. At best, they could face an additional tax bill with added penalties and interest. They could also not receive a refund or an amount lower than expected.

Failing to respond to the IRS and correct errors could be a red flag that triggers an audit. During the audit, the IRS will examine the taxpayer’s returns more closely. The IRS may discover more errors, or the taxpayer may owe additional taxes.

The IRS may consider investigating further for more serious errors or those with high value. While the IRS understands that mistakes happen, it also takes fraud seriously. Not correcting errors can give the impression that you didn’t make a mistake. Instead, you knew of the error and intended to make it. If the IRS suspects that the error isn’t a mistake and instead is fraud, it may pursue legal action. The taxpayer could face criminal charges for tax fraud.

Ziering discusses a taxpayer’s ability to avoid penalties, but that penalties vary greatly depending on the error and the state or federal law. “You may be able to avoid the penalties altogether without a headache, but the normal penalties vary from state to state. You could always try to get the penalties abated.”

Can You File an Amended Tax Return if You Made an Error?

Taxpayers who realize they have made an error can correct it before the IRS recognizes it. The solutions available to them will depend on the error and when they discover it.

Superseding Return

The IRS introduced a newer option: A superseding return. Taxpayers will use Forms 1040/1040-SR, 1040-NR, and 1040-SS/1040-PR to indicate they are filing a superseding return. Taxpayers use this form when they have already filed a tax return and want to file a second one before the due date. This form indicates to the IRS that the previously filed return should be ignored, and this is the correct one.

Amended U.S. Individual Income Tax Return

If a taxpayer needs to correct a return after the tax year’s due date, they can use Form 1040-X. This form must be filed within three years of the original return’s filing. This three-year deadline is primarily because the IRS generally focuses on the previous three years for potential audits. However, it is smart to file an amendment for older tax returns if you discover them, just to be safe.

The Process of Fixing a Tax Error

If you realize you have made a mistake on your tax return, how you correct it will depend on when you discover the error and what the error is. You likely don’t need to do anything if you have made a math error. The IRS will fix the error for you and send a letter communicating as such. You can file an amended return after the IRS processes your return if the math error is not corrected. If you correctly claimed income but forgot to include the form, such as a W-2, you also don’t need to do anything. The IRS will request the form for you.

You Discover the Error

If you realize you made an error with your filing status, dependents, total income, deductions, or credits, you should correct the error. Correcting the error before the current tax year’s due date requires filing a superseding return. Complete an entirely new tax return and select the applicable superseding form. If it is after the due date for the return you want to correct, file a Form 1040-X. These forms can be filed by mail or electronically through the e-file service. Generally, it takes eight to twelve weeks to process an amended return. In some cases, it can take up to 16 weeks.

The IRS Discovers the Error

When the IRS discovers the error, it will send a letter communicating as much to the taxpayer. What the error is will dictate whether or not the taxpayer needs to do anything. The taxpayer will generally not have to do anything if it is a math error or a forgotten form. You will only have to take action if you are required to make an additional payment to a tax liability or do not agree with the IRS’s changes.

For other types of errors, the IRS will send a letter explaining the error and the actions required by the taxpayer. Always respond within the deadline listed in the letter. Gather the necessary documents and tax forms. Make a copy so you can send one set and keep a set for yourself. Your letter will include contact information to follow up on the processing of your response. Processing times can vary but typically take 30-60 days. You will receive additional communication from the IRS outlining further required action or closing the matter.

Do You Need a Tax Lawyer to Fix Tax Errors?

Generally, taxpayers do not need a lawyer to correct their tax returns. The taxpayer can determine what needs to be corrected from the IRS notice. If they have hired a tax preparer, they should forward a copy of the letter to their preparer, who will make the necessary corrections.

If the issue is complicated or serious, it could be time to hire a tax attorney. If you disagree with the IRS, an attorney can help you communicate with the IRS to appeal. A tax attorney can also assist if the error leads to an audit or criminal investigation. When in doubt, speaking with a tax lawyer can help ease anxiety and stress by providing guidance and answers.

Consult With a Tax Attorney

If you realize you have made a mistake on your tax return, take a deep breath. The IRS understands that mistakes happen. Your next course of action to correct the mistake will depend on when the mistake is discovered. If you are unsure of what to do or have questions, speak with a lawyer before you do anything. An experienced tax attorney can provide knowledgeable guidance to ensure you take the correct steps and follow the IRS tax code.

Visit the Super Lawyers directory to begin your search for an experienced tax attorney.