What If I Make a Mistake on My Tax Return? Here’s What to Do

Filing taxes can be stressful, and mistakes happen more often than people realize. Whether it’s a math error or missing information, errors on a tax return don’t necessarily mean disaster. Recognizing the mistake and correcting it quickly can help minimize penalties or delays.

Understanding how tax authorities handle these errors and what steps to take can make the process smoother.

Types of Tax Return Errors

Mistakes on a tax return range from minor miscalculations to more significant issues like selecting the wrong filing status. Some errors are easily corrected, while others require additional documentation or filing an amended return.

Calculation Discrepancies

One of the most common mistakes involves miscalculations in income, deductions, or credits, which can lead to an incorrect tax liability or refund. Even with tax software, errors occur if numbers are entered incorrectly or formulas are overridden.

For example, if a taxpayer mistakenly reports $25,000 in deductions instead of $22,000, their taxable income would be understated, affecting their tax liability. The IRS often corrects basic math errors automatically, but these adjustments can delay processing or change the refund or amount owed.

To reduce miscalculations, taxpayers should double-check numbers, use error-detection software, or consult a tax professional.

Missing or Incorrect Data

Entering incorrect information or omitting required details is another common issue. Mistakes in Social Security numbers, employer identification numbers, or bank account details can delay refunds or lead to a rejected return.

Income reporting errors are frequent. All income sources, including wages, freelance earnings, and investment gains, must be reported. If a taxpayer forgets to include income from a side job reported on a 1099-NEC, the IRS will likely detect the discrepancy through its matching programs.

To avoid these problems, taxpayers should review personal details and cross-check income documents like W-2s and 1099s before filing. Keeping organized records throughout the year simplifies the process.

Filing Status Confusion

Selecting the correct filing status is crucial because it affects tax rates, deductions, and credit eligibility. Many taxpayers choose the wrong status, especially after life changes such as marriage or having dependents.

For instance, a single parent who qualifies as head of household but mistakenly files as single may miss out on a higher standard deduction and lower tax brackets. Conversely, claiming head of household status without meeting the requirements can trigger an audit and penalties.

Understanding each filing status—Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Surviving Spouse—helps ensure accuracy. The IRS Interactive Tax Assistant tool can provide guidance.

Possible Official Responses

When a tax return has an error, the IRS or state tax authority may correct it, request additional information, or require further action.

For minor errors, such as a misreported tax credit or a small income discrepancy, the IRS may adjust the return and send a notice explaining the correction. Notices like CP11 or CP12 outline the changes and any impact on the refund or balance due. If the taxpayer agrees, no action is needed. If they disagree, they can provide documentation supporting their original filing.

More significant mistakes, such as missing income sources, may trigger a CP2000 notice, which is not a formal audit but a request for clarification. This notice results from the IRS’s Automated Underreporter Program, which cross-checks tax returns against third-party reports like W-2s and 1099s. If discrepancies arise, the IRS proposes an adjustment and allows the taxpayer to respond before making changes.

If further review is needed, the IRS may initiate a correspondence audit, requesting documentation to verify specific items. Unlike a full audit, which requires in-person review, correspondence audits are handled by mail and focus on discrepancies like unverified deductions or credits. Taxpayers must provide supporting documents by the deadline; failure to respond can result in disallowed deductions or credits.

In rare cases of suspected intentional misreporting, the IRS may escalate the case to a full audit or impose penalties for negligence or fraud. Negligence penalties can be up to 20% of the understated tax, while fraud penalties can reach 75%. If the misrepresentation appears deliberate, the case may be referred for criminal investigation, though this is reserved for serious or repeated offenses.

Adjustments to Refund or Balance

If the IRS or a state tax authority identifies a discrepancy, they may adjust the refund amount or balance owed. These changes often result from miscalculations, improper credit claims, or unreported financial transactions.

If an adjustment increases a refund, the IRS typically issues the additional amount automatically, provided no further verification is needed. For example, if a taxpayer underreports their eligible Earned Income Tax Credit (EITC), the IRS may correct it and issue the extra refund. However, in cases where eligibility for credits like the Child Tax Credit is unclear, the IRS may request supporting documentation.

A reduction in the expected refund can occur when the IRS corrects an overstated deduction or applies an outstanding federal debt, such as unpaid student loans or past-due taxes, to the refund. The Treasury Offset Program (TOP) facilitates these offsets, and taxpayers receive a notice explaining the adjustment. If they believe the offset was applied in error, they must contact the agency that issued the debt rather than the IRS.

For taxpayers who owe additional taxes, the IRS will send a notice detailing the revised balance and payment options. If the amount due is significant, installment agreements or short-term payment plans may be available. Interest and late payment penalties continue to accrue until the balance is fully paid. Taxpayers experiencing financial hardship may qualify for temporary collection relief or an Offer in Compromise, which allows for a reduced settlement amount.

Penalty Considerations

Errors on a tax return can result in penalties, but the consequences depend on the type of mistake and whether it was accidental or due to negligence. The IRS distinguishes between inadvertent errors and willful disregard of tax rules, with penalties increasing for substantial understatements or misrepresentations.

Failure-to-pay penalties apply when a taxpayer owes additional tax but does not pay by the due date. This penalty accrues at 0.5% per month on the unpaid amount, up to 25%. Interest also compounds daily based on the federal short-term rate plus 3%, making it costly to delay payment. If the balance remains unpaid for an extended period, the IRS may issue a Notice of Federal Tax Lien or initiate levy actions against wages or bank accounts.

For more serious errors, the accuracy-related penalty under Internal Revenue Code 6662 imposes a 20% charge on any underpayment resulting from negligence, substantial understatement, or improper valuation. A substantial understatement occurs when the reported tax liability is at least 10% or $5,000 lower than the correct amount. If a taxpayer incorrectly claims deductions without reasonable basis, the IRS may assess this penalty even if the mistake was unintentional.

Communication from the Tax Agency

When an issue arises with a tax return, the IRS or state tax authority sends a formal notice explaining the discrepancy, adjustment, or required action. These notices vary in urgency, from simple informational letters to detailed requests for documentation or payment.

A CP2000 notice is commonly issued when reported income does not match IRS records. This is not an audit but a proposed adjustment, giving the taxpayer a chance to agree or dispute the findings. If the taxpayer believes the IRS is incorrect, they must provide supporting documents, such as pay stubs or brokerage statements, within the deadline. Ignoring this notice can result in the IRS finalizing the adjustment and issuing a bill for additional taxes owed, plus interest.

Other notices, such as CP14, indicate an outstanding balance due, while CP501 and CP503 serve as escalating reminders for unpaid taxes. If a taxpayer fails to respond, the IRS may issue a CP504, warning of intent to levy assets. Responding promptly and keeping copies of all correspondence helps ensure a smoother resolution process.