DEFINITION of 'Substitute Return'

A tax filing that the IRS will create for a taxpayer in order to preliminarily calculate the tax due, if a taxpayer neglects to file his or her own return. The IRS creates a substitute tax return by using the tax form data that it has received about you from your employer, bank and other sources. Since the tax forms received by the IRS do not include all the relevant tax data, a substitute return will likely be inaccurate and may not reflect all the items of income, deductions and credits that should be on the return.

BREAKING DOWN 'Substitute Return'

The creation of a substitute return is typically done only for taxpayers who are significantly delinquent in filing a return. The substitute return is then used as a basis for imposing penalties, interest charges and initiating collection processes against a taxpayer's wages, bank account and property if the taxpayer is found to owe further taxes. The IRS advises that even if a substitute return has already been created in a taxpayer's behalf, the taxpayer should still file a return so that all of the correct income, deductions and credit items are claimed.

RELATED TERMS
  1. IRS Form 4868

    IRS Form 4868 is a form for taxpayers who wish to extend their ...
  2. Amended Return

    An amended return is a return filed in order to make corrections ...
  3. IRS Publication 1

    A document published by the Internal Revenue Service that identifies ...
  4. Tax Season

    Tax season is the time period between January 1 and April 15 ...
  5. Revenue Agent's Report - RAR

    The RAR is a detailed document that describes an IRS examiner's ...
  6. IRS Publication 538

    A document published by the Internal Revenue Service (IRS) that ...
Related Articles
  1. Taxes

    20 Tax Changes You Need To Know About

    Don't miss out on the tax changes. Here's a list that you need to know about.
  2. Taxes

    Start Over With The IRS

    If you're struggling to pay back taxes, try a fresh start with the IRS. They really can help.
  3. Taxes

    IRS Asset Seizures: Could It Happen To You?

    If you can't pay your taxes, know that the IRS has many avenues for collecting what you owe.
  4. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  5. Taxes

    Smart Year-End Tax Moves for 2016 (Part Two)

    Here's are some crucial tax planning strategies for investments, Social Security and Medicare.
  6. Taxes

    How The Wealthy Slash Their Income Tax Bills

    Many of these tax-minimization strategies can be used by anyone. Find out how you can pay taxes like a millionaire.
  7. Taxes

    Why You Can't Send the IRS Prefilled Tax Returns

    Lobbying by Intuit, H&R Block and others keeps the IRS from sending out prefilled tax returns that taxpayers can review, correct, sign and send back.
  8. Taxes

    Is Filing an Early Tax Return a Good Idea?

    Filing an early tax return makes sense if you are receiving a refund, but what if you owe tax? There are more reasons to file early than just a refund.
  9. Taxes

    Trump Changes Obamacare Income Tax Policy

    Don't disclose health insurance? The IRS will now accept your tax form. But watch for penalties.
  10. Taxes

    7 Expenses You Won't Believe Are Deductible

    Many taxpayers would be surprised to discover some of the things that qualify as legitimate deductions.
RELATED FAQS
  1. Do I need to file an income tax return every year?

    Understand if a person needs to file a tax return every year. Learn the benefits of filing a yearly income tax return even ... Read Answer >>
Hot Definitions
  1. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  2. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  3. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  4. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  5. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  6. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
Trading Center