What do you do if you made a mistake on your tax return? Or worse, what do you do if the IRS sends you a letter saying that you made a mistake on your tax return? Do you know how to correct a mistake on your tax return? If not, don’t worry. We do.
Can You Correct a Mistake on Your Tax Return?
Yes, you can correct a mistake on your tax return. Start by contacting a professional, such as Tax Resolution Group in Sarasota, FL. At Tax Resolution Group, our tax resolution specialists help you navigate the tax maze, so you stay out of hot water with the IRS – or get out of tax debt if you are already there. If you owe back taxes or have back tax debt, we can help. Contact us today to Request a Free Consultation.
Three Types of Tax Return Mistakes
The IRS looks for a number of different red flags when reviewing tax returns. Here are three of the most common mistakes people make on tax returns:
1: Math errors or number entry errors. Not many people file paper forms these days, but even if you do, it eventually gets entered into a computer. Math mistakes may be found once the return is received by the IRS. If you file electronically, you may not have math mistakes, but you could easily enter numbers incorrectly. If things don’t add up – even if there is an honest mistake in entering the numbers – the IRS will take note. A mistake may not automatically trigger an audit, but it can lead to more investigation. Having a qualified tax professional prepare or review your forms before you file can help you stay out of tax trouble. And we can help if you’ve already filed and made a mistake, too.
2: Not reporting all your income. You are required to report ALL of your income, regardless of how much or how little it is. Your income is reported to the IRS by the payer, so the IRS already knows about it. If you run your own business and operate on a cash basis, that’s also a red flag to the IRS. If the income you report doesn’t match what is reported to the IRS, that’s a red flag.
3: Overstating your business expenses. If you claim a deduction for business expenses, you need to make sure you can substantiate what you claim. For some types of jobs, you may be able to deduct expenses that are not covered by your employer. Don’t be tempted to write off more than your actual, deductible expenses. Check with your tax professional to make sure you aren’t trying to write off expenses that aren’t approved.
Correcting a Mistake on a Tax Return
You may not notice that you made a mistake on your tax return until you are preparing your taxes the following year. There are many ways a mistake like this can come to light. For example, you may share something with your tax preparer that you didn’t mention in a previous year and realize that information affects the previous return as well. Using IRS Form 1040X, you can amend a return up to three years after the due date of the original return. On Form 1040X, you will report what was originally filed, the correct information and the reason for the changes.
Tips on Filing a Form 1040X
- Form 1040X must be filed and mailed as a paper form even if you electronically filed the original return.
- Use a separate Form 1040X for each year you need to correct and mail it in a separate envelope.
- The return year should be written at the top of the form.
- Explain the changes and the reason for them on the back of the form.
- If other forms or schedules are affected by your changes, they need to be included and sent in with the Form 1040X.
- While you can do this yourself, we highly encourage you to consult a professional tax resolution firm, such as Tax Resolution Group.
Should you Still Amend Your Return if It Means You Will Have to Pay More?
This may not the be answer you want to hear, but yes. If you find a mistake, you should amend your return, even if it means you will have to pay more to the IRS. In most cases, the IRS will eventually discover the mistake anyway. For example, if you earned money at a side job and did not file a Schedule C to report that income, that income will likely be reported to the IRS by the payer, and you could be charged the amount of income tax you owe plus interest. The sooner you catch the mistake, the less interest you will pay.
If you have outstanding tax debt and owe money to the IRS, contact Tax Resolution Group today. Tax Resolution Group specializes in fixing tax problems. We offer proactive tax services including tax resolution, tax planning, tax preparation and audit support. We offer in person, virtual service or socially distanced service, and we are ready to help you. Call us for tax help today at 941-413-2799 or Request a Free Consultation.