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What Happens if I File My Taxes Incorrectly?

What Happens if I File My Taxes Incorrectly?

It's the start of the 2021 tax season, and you can't wait to get started. Gather your documents for the 2020 tax year and complete federal and state taxes before the filing date is due. But when you're done, you'll find that you forgot to claim a deduction. So, can you correct an error in a tax return that you have already filed?

Many people make mistakes on their tax returns every year. Some forget to include income, while others do not claim the credits to which they are entitled. Of course, you can correct your tax return after you've filed it, and we'll show you how.


What happens if I file my taxes incorrectly?

If you make a mistake on your tax return, you must correct it as quickly as possible. Many things can happen, depending on who finds the error (you or the IRS) and how you handle it. Let's take a look at some common scenarios.


You realize right away: Suppose you realize your mistake right away. Your first inclination might be to file a new statement, but no. Instead, follow the instructions we will provide later to make a correct declaration.


The IRS finds your fault: People make mistakes all the time, and that includes the IRS. The IRS may recognize your mistake and send you a notice to correct the return. If this happens to you, don't worry; complete the appropriate tax form before the deadline set in your notification. It is that simple.


Nobody finds your fault: If no one finds your error, your tax return can be processed with the error intact. Unfortunately, your negligence can arise during an IRS audit, and if it does, you could end up with a huge and unexpected tax bill plus a fine.


How to change your tax return

Tax changes are not the only solution. If the IRS sends you a warning, follow the instructions exactly to resolve the error. If you see an error independently, here's what to do:

  • Check again to make sure you made a mistake. Taxes can be extremely confusing, and you can't always remember all the calculations.

  • Check to see if the IRS has already noticed the problem. If your return has been processed, is the tax refund higher or lower than expected? The IRS has Form 1099 and W2 information on file and sometimes corrects returns based on known information.

  • If a correction needs to be made, file an amended income tax return, also known as Form 1040-X. You can use a 1040-X to send additional or updated information to the IRS and attach another form to your tax return.

  • Pay any additional fees due as soon as possible to avoid adding interest.


Common tax errors

Tax returns are complex, some more than others, and it's easy to make mistakes. Even experts get it wrong from time to time. Here are some of the most common tax mistakes.

  • Errors in mathematical calculations: Math errors are common, from a forgotten zero or a decimal point in the wrong place to a simple computer error, especially in printed renderings.

  • Forgotten deductions or credits: You may owe more taxes than you expect if you lose a deduction or credit. The IRS won't automatically report these types of things, so if you notice your error, fill out Form 1040-X and correct the error.

  • Not reporting all income: You may have forgotten a W2 or received 1099 in the mail after filling out your taxes. Either way, you must file an amendment to report to the IRS; otherwise, you risk initiating an audit.

  • Lies: Whether bold or cunning, lying has no place in tax returns. Exaggerating charitable giving, deliberately hiding income, or falsely altering employees amounts to tax evasion, which is illegal. If you lie about your taxes, you could be sued.


Will the IRS correct my return?

The IRS sometimes corrects returns automatically. If the IRS detects an arithmetic error, it will usually correct the oversight and notify the taxpayer.


Avoid making mistakes this tax season.

Most mistakes in tax returns are innocent mistakes. However, there are some things you can do to reduce careless errors and improve accuracy. Here are two tips to help you keep track of your tax return.

  • Organize your finances: Create a recording system for receipts, payments, business miles, and invoices so you don't have to struggle to retrieve tax information. Organized people lose deductions and credits less often.

  • Gather all your information before submitting the request: Check three times to see if you have all the info you need before filing your income tax returns. Suppose you need more time to pay taxes due to a six-month extension before May 17, 2021. However, pay the taxes that will be paid before May 17. Otherwise, you will earn interest, and an estimate of expenses will be significantly better than nothing.


Mistakes Happen But Try To Prepare For Tax Season

You are human, and taxes can be complicated. If you make a tax error, don't panic, do everything you can to correct it. But if you can, avoid making tax mistakes by paying special attention.

Don't rush your taxes this season. Instead, wait until you have all the information you need and work with a tax professional such as UNIVERSAL ACCOUNTING & FINANCIAL SERVICES, INC.


FOR MORE INFORMATION ON HOW WE CAN BEST HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLICK THE BLUE TAB ON THIS PAGE.


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UNIVERSAL ACCOUNTING & FINANCIAL SERVICES INC.
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