Inaccurate Tax Return, Now What?

by Brigitte Yuille (Contact Author | Biography)

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Filed Under: Taxes

Use caution when selecting your tax preparer. Some aren't always accurate and, according to the Internal Revenue Service (IRS), you are responsible for what's on the return. This means you may have to pay additional taxes and interest or face a penalty. Fixing inaccurate returns involves additional paperwork but you can avoid this hassle to by picking a good tax preparer and double checking the return for mistakes. We'll show you how to get it right the first time around. (To learn more, read 10 Steps to Tax Preparation.)

Fixing an Inaccurate Tax Return
If you hire a professional to help with your taxes, don't assume that your return will be error free. So, what can be done if the IRS finds a mistake? One form can help you fix a return when the filing status, income, deductions or credits are incorrect. It's called, the Amended U.S. Individual Tax Return, otherwise known as Form 1040X. (To learn more about tax credits, read Tax Credits You Shouldn't Miss.)

Use the 1040X, to correct the following:

1040
1040A
1040EZ
1040NR
1040NR-EZ

This form is available on the IRS website and requests must be filed on paper and mailed to your IRS servicing center for processing. Before sending it to your service center for processing, don't forget to include copies of any schedules that have been changed, and any Form W-2s that were left out.

You must file the form within three years after the date you sent your original return in order to get a credit or a refund, or file it within two years after the date you paid the tax, whichever is later. Wait until you have received your original refund if you are filing to claim another one. If you have to pay more tax for a current year, file and pay that tax by April 15 to avoid a penalty and interest charges. If April 15 falls on a weekend, you will need to do it on the next business day. Also, make sure to check with your state tax agency to find out if your state tax liability is affected.

Bad tax preparers often wrongfully inflate personal and business expenses, falsify deductions, claim inappropriate credits or exemptions for clients, or manipulate income figures. The IRS addresses these abuses with Form 3949-A. You should file this form if you suspect an individual or company is not complying with tax laws. Send the form or letter to: Internal Revenue Service, Fresno, CA 93888. Identifying yourself isn't necessary, but the IRS finds it helpful when you do; and, if you decide to give your identity, it's kept confidential.

Finding a Qualified Tax Preparer
Good preparers have your best interest in mind and follow the rules and they are likely to ask for records and receipts. They will ask questions that help them determine your total income and qualifications for exemptions, deductions and other items. The IRS suggests when seeking out a tax preparer that you do the following:

Ask about the fees and look out for those who promise a larger refund than their competitors.
Make sure that you will be able to contact the preparer after the return is filed, and that he or she responds in a timely manner.
Ask for references from clients.
Check out the preparer's history by contacting the Better Business Bureau (BBB) and the state's board of accountancy for Certified Public Accountants (CPA), or the state's bar association for attorneys.
Find out the preparer's credentials. Does he or she meet the state's licensing or registration requirements? Is the preparer an enrolled agent, CPA or attorney?

Avoiding Common Mistakes
Even if you think your selected tax preparer is great, be sure to review the return for any errors. The IRS often sees the following mistakes:

Wrong filing status
Incorrect use of forms or schedules.
Improper filing for the earned income credit (EIC).
Claiming ineligible dependents
Not paying and reporting domestic payroll taxes
Not reporting income because it wasn't included on a Form W-2
Not filing a return when a refund is due
Not checking liability for the alternative minimum tax (AMT) (To learn more, read Cut Your Alternative Minimum Tax.)

The National Association of Tax Professionals (NATP) advises keeping an eye out for the following items:

The return is signed in the proper place.
If filing jointly, that your spouse has also signed the return.
Copy B of all Forms W-2 are attached as well as any Form 1099 that report tax withholding.
The return is mailed to the proper address.
Social Security numbers are accurate.
The check is payable for money owed to the "United States Treasury Service" and not the IRS.
Tax tables are double-checked as well as all calculations.
A copy is made for your records.
Enough postage is on the envelope and your full return address is given.

The NATP also suggests using registered mail, especially if money is owed.

Conclusion
Dealing with the IRS about your tax return problems - and paying additional charges for reckless mistakes - can often be avoided. Choose the right preparer and make sure to go over the instructions and tax return with them to get rid of those common mistakes. Also, tax software programs have been simplified for individuals to prepare the tax return on their own. Visit the Internal Revenue Service's frequently asked questions if you run into any problems.

by Brigitte Yuille, (Contact Author | Biography)

Brigitte Yuille has worked in journalism for more than a decade in the areas of radio, online, print and television. Her personal finance articles have been published in newspapers, such as the New Jersey Star-Ledger and the South Florida Business Journal and online at AOL, Bankrate, Inc., MSN and Yahoo. She’s also served as an editor for Florida Society of Association trade publications. Ms. Yuille has a Master of Science degree in communication with an emphasis on business journalism from Florida International University.

Filed Under: Taxes

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