Taking Steps to Correct Errors on Your Tax Return
June 26, 2023
How to correct your tax returns with ease
Preparing and understanding tax returns can be complex and challenging. Even professionals sometimes struggle to ensure every number and detail is accurate. Often, mistakes are only noticed after submitting the return online or sending it via mail, or worse, when the IRS sends a notice regarding discrepancies. If you find yourself in this situation, it's crucial to know what to do next.
Fortunately, there are several actions you can take. However, if you are unsure where to begin, it is advisable to seek assistance from a tax resolution professional. Our team of experts
specializes in navigating the complexities of the IRS, providing you with peace of mind. Whether you owe back taxes or have outstanding tax debt, contact us today for a free consultation.
Common Types of Errors
The IRS scrutinizes each tax return for various red flags. Here are three common mistakes made by taxpayers:
- Not reporting all income: Regardless of the amount earned, it is essential to report all income accurately. Unless you run a strictly cash-based business (which raises a red flag), the IRS receives duplicate copies of W-2, 1099, and other forms detailing your income. If your reported income does not match the IRS records, it can raise suspicion.
- Overstating business expenses: Depending on your occupation, there may be legitimate expenses that your employer does not reimburse. If you operate a business, there might be a temptation to inflate deductions. While some deductions may be valid, it's important to adhere to the approved list and avoid claiming deductions far beyond the norm. Consult with a tax professional to ensure compliance with tax laws and prevent improper deductions on your return.
- Math errors: Whether filing electronically or using paper forms, your information is entered into a computer system. Computers excel at mathematical calculations, making any errors or discrepancies stand out. While a math error may not necessarily lead to an audit, it can attract unwanted attention. Double-checking your returns and involving a qualified tax professional can help prevent such issues.
Filing an Amended Return - The 1040X
Individual income tax returns can be amended within three years of the original due date by filing IRS Form 1040X. This form allows you to provide the IRS with information on what was originally filed, the corrected details, and the reason for the changes. Additionally, it enables adjustments to personal exemptions, such as correcting errors related to dependents.
Here are a few tips for filing the 1040X form:
- Use a separate 1040X form for each year requiring corrections and send each form in its own envelope.
- Clearly indicate the tax year at the top of each form.
- Explain the changes and reasons for correction on the back of the form. Include any schedules, forms, or supporting documentation affected by the changes.
- If your federal corrections impact your state taxes, submit a corrected return for the relevant state as well.
It is strongly recommended to consult a tax resolution professional for assistance with your amended return. They can help file multiple years of unfiled tax returns, facilitate settling for a reduced amount, and provide valuable guidance to help you avoid tax-related troubles.
You Have 3 Years
Many taxpayers only discover errors in their tax returns when preparing subsequent year's returns. These mistakes may come to light during discussions with tax preparers or through personal review. There is no specific time limit for correcting a return; amendments can be made whenever an error is noticed. However, the IRS generally accepts corrections up to three years after the original return's filing date.
The 1040X is a Paper-Only Form
Even if you typically e-file your tax returns, the 1040X form must be filed as a physical paper form. The IRS does not currently accept electronic filing of the 1040X form. Pay attention to the correct mailing address for the form, as it differs from the address for regular returns.
If Correcting Mistakes Results in Additional Taxes Owed
If you discover a mistake on your tax return that underreports your tax liability, it is crucial to amend your return promptly. The IRS is likely to uncover significant discrepancies, such as unreported income from freelancing or self-employment, and may impose interest and penalties on the outstanding tax owed. By proactively addressing the error, you can minimize the impact of interest charges.
If you anticipate having substantial tax debt and owe more than $10,000 to the IRS or state and cannot afford to pay in full, lump sum, it is advisable to contact our firm for assistance. We specialize in helping individuals find tax relief and, in some cases, settle their tax debt for a fraction of the total amount owed. Don't hesitate to reach out to us for a resolution.
Correcting errors on your tax return is essential to maintain compliance with IRS regulations and minimize potential penalties. By taking the necessary steps to amend your return with the assistance of a tax resolution professional, you can ensure accuracy and alleviate any concerns regarding your tax situation.
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Tax season started in late January, but the IRS’s latest statistics show that many Americans are still waiting to file their taxes. As of February 7, 7.7% fewer tax returns have been received by the agency compared to a similar time frame last year, according to its latest data release. While the IRS expects filing numbers to even out, the IRS.gov website has experienced a 40% decline in visits this year to date over last year. Francine Lipman, CPA, a tax law professor at the University of Nevada, Las Vegas, says the reasons could be endless but probably come down to simple procrastination. “Despite all the Super Bowl ads, I don’t believe that tax issues are on people’s radar yet,” adds Lipman. This is surprising considering the political climate, says Jordan Rippy, an accounting professor at Johns Hopkins University’s Carey Business School, who expected to see an uptick in returns filed this year. “Given the general climate surrounding the new administration, I would have expected more anxiety in the general population and a desire to receive refunds more quickly,” she tells Fortune. Elon Musk’s Department of Government Efficiency (DOGE) reportedly visited the IRS on Thursday to begin analyzing the agency’s operations. Senator Ron Wyden (D-OR), ranking member of the Senate Finance Committee, later posted on X that “if your refund is delayed, they could very well be the reason.” Average tax refunds are higher this year so far The rise in electronic filing is one of the biggest changes to the tax system in the last decade. With over 90% of individual taxpayers now filing their returns online, the process has become easier to handle for many Americans. But taxpayers still miss out on over $7 billion in underclaimed and unclaimed tax credits and deductions each year. In the 2025 tax season to date, tax filers have received a 18.6% increase in their average refund amount ($2,065) compared to this time last year ($1,741). The IRS cautions this isn’t a perfect indicator of the final trend in tax refunds, since it’s early in the season. The agency says most refunds are issued within 21 days. In the final analysis, the average refund last year was around $3,138. Compared to 10 years prior, last year’s average rebate was down nearly 30% on an inflation-adjusted basis. Rippy says she is surprised that average tax refunds have not decreased more as Americans realize they can adjust their withholdings and get more money per paycheck throughout the year. “If you receive a large tax refund, what you've essentially done is given a loan to the government over the last year that you didn't have to give them, and you've done that interest-free,” says Rippy. At the same time, she admits that the fact that many Americans expect a big refund year after year is a good thing, as it’s a form of forced savings. While many end up saving their refund, others use it to pay down debt, make a home improvement, or go on vacation. Need help filing your taxes or having issues with the IRS? Receive your free consultation from Advantage Tax Relief today! https://www.advantagetaxrelief.net/request-form or by calling (630) 773-3200.
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