File Taxes Incorrectly? How To Correct Your Tax Return And Avoid IRS Penalties
Tax season is on the horizon, and a frequently asked question we receive from panicked clients is what happens if you file your taxes incorrectly. TaxRise understands this is an uncomfortable position to be in, and we’re here to guide you through this situation.
We will also cover how to correct your tax return and avoid penalties and back tax interest.
How Do I Know If I Incorrectly Filed My Tax Return?
The IRS audits tax returns, and if they find a mistake, they will send you a letter. This letter will tell you if you owe back taxes or what steps you need to take to amend your return.
If the mistake is more serious, such as underreporting income or tax fraud, then you may face an IRS audit. Here’s an in-depth article on how to survive an IRS audit.
It’s important to note that despite their advanced software and comparing data from multiple places, the IRS won’t catch every mistake on a tax return. It’s important to review your tax returns for accuracy.
Though we mainly help clients get tax relief, TaxRise does offer tax return preparation. If you’re struggling with tax debt, we offer a free tax consultation where we evaluate your unique financial situation and recommend the best Fresh Start Program for you.
How Do I Re-File My Taxes?
If you forgot to include or change something in your tax return, you must fill out and submit Form 1040-X (amended return).
You can also have a tax professional prepare this form for you.
Should I Amend My Tax Return?
When a mistake is found, you must fix it as soon as possible to avoid penalties and, if you owe back taxes, avoid cumulative interest.
You will most likely be asked to submit an amended return.
Can I Go To Jail For Filing My Taxes Incorrectly?
No, you can’t be jailed for making an accidental mistake in filling out paperwork. But, if the mistake is intentional, that’s where things get interesting.
Intentionally avoiding taxes violates federal law, which means a criminal suit can be filed. When it comes to taxes, your intent matters, and that will ultimately decide whether criminal action will be taken or not.
Will The IRS Automatically Correct My Return?
No, the IRS won’t generally correct your return. There are, however, a few exceptions where this is the case and when you won’t need to submit an amended return.
The IRS will automatically correct your return when:
- Math errors: if your mistake is a small math error or miscalculation, the IRS will automatically correct it. You may be asked to provide more information.
- Clerical errors: if you forgot to attach a form or schedule, you’ll be asked to send in the documents.
Though the IRS may make your life easier, if you underestimate your tax liability, the IRS will force you to pay the amount you owe along with any interest accrued.
How To Avoid Common Tax Filing Mistakes
Here are the top 3 tax filing mistakes. Don’t let this worry you too much though — many Americans file their taxes incorrectly and need to amend their tax returns each year.
As long as you take initiative, you will be fine.
1. Small Clerical And Math Errors
When it comes to numbers, it’s so easy to miscalculate. Additionally, incorrectly entering important information, such as your SSN, address, and name are quickly obvious during IRS tax return checks.
Using tax software or just double-checking your numbers is a great way to ensure your math is correct.
2. Incorrect Credits Or Deductions
To claim credits or deductions, you must not only ensure you qualify but fill out additional paperwork.
During tax season, everyone is busy, and it’s simple for paperwork to slip through the cracks. Forgetting to attach additional forms and schedules is a common filing mistake.
Make sure to double-check you have everything included before you submit.
3. Unsigned Returns
Though we’re sure any taxpayer can forget to sign off on important documents, this common filing mistake is more common with those who serve in the military or have a power of attorney.
An unsigned tax return isn’t valid, so make sure everything is signed.
Is There a Penalty For Filing My Taxes Incorrectly?
As we mentioned earlier, there is no specific penalty for incorrectly filing your tax return. There are, however, penalties associated with tax debt. So, if you made a mistake but you don’t owe any back taxes, you’re in the clear!
Incorrectly filing your taxes often leads to owing back taxes, which is what the IRS penalizes to encourage taxpayers to pay. When you file taxes incorrectly, it’s crucial you make sure all your taxes are up to date.
You’ll most likely encounter the failure-to-pay penalty. This is when you filed your return on time and owe unpaid taxes that are overdue. This penalty is .5% per month (or part of the month), with a maximum penalty of 25% of unpaid taxes.
The Takeaway
It’s easy to get caught up in tax laws and be buried in penalties and interest. However, it doesn’t have to be this way.
TaxRise has helped thousands of American taxpayers just like you resolve their tax issues and erase their tax liability. Check out our free tax consultation. From this quick call, you’ll be able to determine if you qualify for our services and which tax relief program will work best for your unique situation.
We help advocate on your behalf to the IRS. We save you stress, time, and money — while providing you with the most optimal resolution.
