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How to correct mistakes on your tax return?


Who is accountable for mistakes on a tax return?

When no one expect from taxpayers to know perfectly the tax law, but the IRS wants everyone choose a tax professional carefully because you will be responsible for everything what on your tax return is regardless who your taxes did or who the mistake made. Of course, the tax professional might also be penalized if he did not perform the due diligence. However, it won’t be your concern and you need to worry how you can avoid costly penalties and interest in case the mistake will occur.

Unfortunately mistakes on your return might happen often whether intentionally or unintentionally. Some of them might be insignificant and won’t affect your refund much while others might cause you not only loss of the refund, but even possibility of facing penalties and interest. For example, the IRS might disallow you to receive earn income credit for 2 year if they find out that you or someone who did your previous year tax return used recklessly the EIC rules or intentionally disregarded them. In case of fraud they might disallow you to claim EIC for 10 years. Therefore, it is extremely important to do your taxes with a reliable tax service company.

How to fix the mistake on your already filed tax return?

If you believe that you made a mistake on your prior or current year return which was already sent through you need to do an amended return and file form 1040X Amended U.S. Individual Income Tax Return. If you file to increase your tax refund, the IRS will give your money back up to 3 years. If you amending because you actually owe more, you need to do it as soon as possible in order to reduce or avoid possible penalties and interest.

Keep in mind that amended returns should be paper filed which increase the time of processing them. Therefore, time issue is especially matter with those types of returns. Be extremely careful with dates when you have some tax liabilities to the IRS.

How to avoid mistakes on your tax return?

Come to your tax service company prepared and bring all relevant documents that you have which might affect your tax return. It is also a good idea to bring your previous year tax return if you think that you did not have much of a change from last year. That way if you forget something the tax professional might remind you about some forms you may forget. For example, the tax pro might see that you had 1099-Div (dividends) last year and ask whether you have it for the current year also.

In addition, you will get a free review of your previous year tax return if you ask about it. The tax professional is not obligated to correct those mistakes (if any) but you will have a peace in mind that everything was done right last tax year and you are not losing any money you deserve.