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How can people resolve a major mistake on a tax return?

On Behalf of | Apr 3, 2024 | Tax Controversy

Tax law is very complex, and the rules for tax returns change regularly. The value of different credits, the way the Internal Revenue Service (IRS) taxes certain assets and various other income tax rules fluctuate based on current policy rules and economic trends.

Many people may have a hard time remaining up to date on the news related to federal tax statutes and IRS policy. As such, small tax mistakes – perhaps due to an understandable lack of knowledge about the nuances of tax law – could lead to audits and even criminal charges in some cases.

Who may face tax controversies over mistakes?

Anyone who makes a mistake when filing their taxes could be at risk of facing complications. Especially when people use basic tax software to put together their own tax returns, the possibility of a mistake due to outdated or insufficient knowledge is significant. They could file a return claiming credits or deductions that may not apply given their circumstances and may underpay what they owe as a result.

It is also quite common for people to forget about certain types of income. Someone who had a part-time job for a few weeks at the beginning of the last year might not remember that employment and could fail to report it. People might overlook unusual forms of income, leading to a major error on their federal income tax return. How can someone who realizes they submitted a tax return with inaccurate information correct that error?

The IRS allows taxpayers to make corrections

While the IRS does not have a reputation for being particularly forgiving of those who underpay their taxes, the prevalence of tax mistakes and oversights could make pursuing every minor issue difficult for the agency.

By allowing taxpayers to recognize their own mistakes to file an amended tax return back, the IRS allows its workers to focus on intentional tax fraud and other text controversy instead of minor steaks. A 1040-X is the document that the IRS typically requires when someone needs to amend a tax return already submitted.

Those who believe they may need to file a 1040-X might need to talk about that document and their tax return with a skilled legal team that is familiar with IRS policy for income tax filings. Reviewing tax paperwork carefully and having someone who can help if the IRS takes issue with a tax underpayment can reduce the stress generated by a recent tax omission or mistake.