It’s easy to make a mistake on your tax returns. Some of the more common errors include messing up your Social Security number, not claiming all of your tax credits and deductions, or forgetting to include the entirety of your earnings for the previous year.
I know these errors all too well. My sister has begun to request that I look over her taxes every year, and each time I find a small mistake (or two). Thankfully, these mistakes are never too big of a deal, but at times her refunds were delayed, or she was charged a small late penalty, since the return was rejected from the system.
Common tax mistakes lead to Americans leaving $1 billion on the table each year, according to estimates by the Internal Revenue Service (IRS). As an ex-accountant, I’ve even been guilty of small mistakes on my tax return and have had to file an amended return.
So what are your options if you forget to file a tax form? Or if you notice a mistake on your tax return after you’ve already submitted it?
Here are the top seven most common mistakes that individuals make on their tax returns as well as steps you can take to correct them.
1. Incorrect or Missing Social Security Numbers
During my days as a tax specialist, I can’t tell you the number of times I’ve personally inverted Social Security numbers. I’ve also received paperwork from a taxpayer who had the wrong numbers copied down.
Your tax return won’t be processed with an incorrect Social Security number. Take extra care writing down or typing in the numbers and double-check them before filing your return.
2. Change of Address or Filing Status
If you’ve moved in the last year, make sure the IRS has an updated mailing and physical address on file. Not having an updated address can slow down the processing of your tax return. This will ultimately delay any refund you’re owed.
In addition, if you’ve gotten married, had a child go off to college, or gone through a divorce in the past year, all of these situations will change your return filing status. Don’t forget to keep your tax preparer updated on all these changes. This way they will have the most accurate information in case the IRS has questions.
3. Bank Deposit or Withdrawal Errors
Thanks to the ease of electronic filing, you can pay your tax bill or request a refund simply by inputting your bank’s routing and account numbers. However, take extra time to ensure these numbers are correct, as this is one of the most common mistakes seen on tax returns.
A delay in your refund is never a fun experience. A delay in paying the balance owed could result in late payment fees and other penalties assessed by the IRS. So make sure you’re providing accurate banking information.
4. Lost or Incorrect Tax Documents
This particular mistake has happened to me every single year that I’ve been self-employed. Just because the accounting department from a client or an employer sends you a tax form doesn’t mean it’s correct.
Double-check your receipts and income records to verify you’re not paying taxes on money that you never received.
Additionally, if you previously filed with a 1040-A or 1040-EZ, these forms are no longer used by the IRS — you’ll have to switch to a 1040 or 1040-SR.
Finally, just because a company doesn’t send you a W-2 or 1099-MISC (even if they’re required to by law), you’re still responsible to report the income. You can request that they reissue a lost tax form or send you a new one. But if they still fail to do so, then you’ll have to rely on your own records.
5. Not Claiming Applicable Credits or Deductions
Don’t fork over your well-deserved credits and deductions to the IRS in overpaid taxes. Thoroughly review your personal situation. Make sure to check with your preparer to verify all the credits and deductions you can claim on your taxes.
“With missed credits, it’s largely because the taxpayer didn’t furnish complete information so we didn’t know they were eligible,” says Katie Thomas, a certified public accountant (CPA) with Diamond J Accounting.
“The number-one tip for people looking to save money on their taxes is to keep a good set of books, because if you can’t tell me how you spent the money, they you can’t take the deduction,” Thomas adds.
Particular credits and deductions to be on the lookout for include expenses related to continuing education or tuition, child care, health insurance, and student loan interest.
6. Not Filing on Time (or At All)
For some, the temptation lingers to forego filing taxes altogether. Keep in mind that not filing your taxes, or filing them after April 15, can land you in some serious hot water with the government and lead to additional fines (at best) or legal prosecution (at worst). Even if you can’t pay your taxes currently, consult a tax professional to file an extension, and follow one of the IRS’ prescribed repayment plans.
7. Forgetting to Keep a Copy of Your Return
As a final precaution, the IRS recommends you keep a copy of your return for three years after filing (six if you filed incorrectly). Doing so can prepare you in case you are audited or assessed additional tax.
“You should also keep a copy of all the supporting documentation, in addition to the tax return,” recommends Thomas.
How to File an Amended Tax Return
In the event that you do find a mistake on your tax return, you need to file an amended return as soon as possible. The longer you put it off, the more penalties and fees that could be assessed to your account, especially if you end up owing more taxes. You can do this in a few basic steps:
Download and fill out Form 1040X from the IRS website. Choose the year of the tax return you’re amending. Generally you must file Form 1040X within three years of the original return’s filing date. If changes to your return include any other forms, like a Schedule C, update and attach that form to the amended return.
Include any additional payment that’s needed or wait for a refund — whatever your case may be.
An amended return cannot be electronically filed and must be mailed in directly. Another thing to keep in mind is that you generally don’t have to file an amended return to correct a math or calculation error. The IRS’ system usually catches and corrects this during processing.
It could take six to eight weeks for your amended return to be processed and applied to your account. Be patient and follow up as needed. The best thing you can do is simply acknowledge the mistake and file a correction as soon as possible. You don’t want the IRS to come looking for you after they find your mistake.
Additional background information for this article was provided by Katie L. Thomas, CPA, Diamond J Accounting.