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Even if your finances are relatively simple, it’s easy to make minor mistakes on your taxes that could have serious consequences. Errors in your deductions or liability calculations may result in interest charges and additional fines and might even trigger an audit. Knowing what to expect if you’ve made a mistake on your taxes will help you resolve the situation as quickly as possible.

What Happens if You’ve Made a Mistake on Your Tax Return

Filing an Amended Return

Depending on the circumstances, you might notice an error on your return before the IRS does. Many taxpayers forget to include income from a side business or received an incorrect 1099 from their employer. If you realize your tax return has errors, it’s best to file an amended 1040X immediately rather than waiting for the IRS to notice. If you owe additional taxes, correcting the mistake as soon as possible will minimize any additional interest fees and penalties.

Receiving a Notice From the IRS

taxesIn most cases, if the IRS notices a discrepancy on your returns, they’ll usually notify you by letter. If your income doesn’t match the 1099s filed by your employer, they may send an amended return with a calculation of your additional taxes owed. However, they might just want to see documentation proving that you qualify for a deduction you claimed.

If you agree with the IRS’s calculation, you may simply pay the additional taxes, along with fees and penalties. However, if you think the IRS calculation is incorrect, you may submit an amended return with your own figures, along with an explanation of why you think they made a mistake.

Being Selected for Audit

While basic mathematical errors or forgetting to include all of your income won’t automatically result in an audit, certain errors may attract the attention of the IRS. For instance, if you made an error and claimed the earned income credit, you have a higher chance of being audited. High-earning taxpayers are also more likely to be audited, particularly if they had to file an amended return.

 

Having a professional help prepare your tax returns will dramatically reduce errors and the added costs they often bring. For over 30 years, Simplified Tax has provided personal attention and insightful advice to taxpayers throughout the Sparta, WI area. Visit their website for a closer look at their services, or call (608) 269-2633 to make an appointment.

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