Why Tax Errors Happen

Mistakes on tax returns usually come up in two ways:

– You receive a letter from the IRS — This is the most common scenario.

– A new tax preparer spots the problem while reviewing your past returns.

Most Common Tax Issues (And How to Fix Them)

1. Credits or Deductions Removed

What happens: The IRS says you’re not eligible for a credit or deduction you claimed, like an energy credit or estimated tax payment.

Fix it:

– Locate the missing forms (like Form 5695 for energy credits).

– Call the IRS and send in the correct documents.

– Sometimes a simple fax or upload resolves the issue.

2. Missing or Incorrect Income

What happens: The IRS thinks you left off income—like 1099 income, stock sales, or retirement withdrawals.

Fix it:

– Check your records to confirm what’s missing.

– If it’s correct, send a written explanation and the missing documents.

– If it’s not your income (e.g., identity theft), report it and ask for a correction.

3. Wage or Tax Withholding Doesn’t Match

What happens: The IRS sees different income or tax amounts than what you reported.

Fix it:

– Provide paystubs, W-2s, or a letter from your employer.

– Confirm your info matches IRS records.

– Submit everything by mail or through the IRS upload tool.

4. Business Expense or Credit Disallowed

What happens: The IRS audits your return and questions things like vehicle expenses, business losses, or child-related credits.

Fix it:

– Be ready to show receipts, logs, or proof of payment.

– If something doesn’t qualify, you may need to amend your return.

– Always check the IRS calculations—they sometimes make mistakes too.

5. Rejected E-File

What happens: Your return gets rejected due to a mismatch in name, SSN, IP PIN, or missing health insurance form.

Fix it:

– Correct the info and try again.

– If you can’t e-file, mail a paper return instead.

Other Important Issues for Business Owners

– Filed too early: If you amend a return too soon after filing the original, it can delay everything.

– Injured spouse: If your refund was taken due to your spouse’s debt, file Form 8379 to claim your share.

– Missed retirement withdrawals (RMDs): If you didn’t take your required distribution, you can often request a penalty waiver.

– Forgot carryovers: Some deductions and credits carry forward—check that nothing was missed (like capital losses or depreciation).

When to Ask for Help from the Taxpayer Advocate

If the IRS isn’t resolving your issue and it’s causing financial hardship, the Taxpayer Advocate Service (TAS) can step in. They’re an independent part of the IRS that helps when things get stuck.

Bottom Line

Mistakes on tax returns don’t have to turn into big problems—as long as you act quickly and provide the right paperwork. If you’ve received a notice or found something wrong on a past return, don’t ignore it.

Need help fixing a past return?  Contact us today for a consultation at admin@fas-accountingsolutions.com