What If My Tax Preparer Made a Mistake?

Discovering an error on a filed tax return can be a source of anxiety for many taxpayers. The Internal Revenue Service (IRS) provides a clear pathway for correcting such errors. This process allows taxpayers to rectify inaccuracies, ensuring their tax obligations are met and avoiding future complications.

Identifying and Verifying the Mistake

Confirming a tax error requires a careful review of your tax return against your original financial documents. Common errors include incorrect income reporting, such as missing W-2 or 1099 forms, overlooked deductions or tax credits, using an incorrect filing status, or simple mathematical errors. Personal information, like Social Security numbers and names, should also be checked for accuracy.

To begin verification, gather all supporting documents, including W-2s, 1099s, and any statements related to income, deductions, or credits. Compare these figures with the amounts reported on your tax return. If discrepancies are found, consult IRS publications or seek a second opinion from a qualified tax professional to confirm the error.

Correcting Your Tax Return

Rectifying a mistake on a previously filed tax return involves using Form 1040-X, Amended U.S. Individual Income Tax Return. This form allows you to correct errors on Forms 1040, 1040-SR, or 1040-NR. Before completing Form 1040-X, gather a copy of the original return you filed, along with any new or corrected tax forms and supporting documents for the changes.

When filling out Form 1040-X, you will enter amounts from your original return, the net change, and the corrected amounts. Clearly explain the reason for each change in Part III of the form. The IRS generally allows you to amend a return within three years from the date you filed your original return or within two years from the date you paid the tax, whichever date is later, to claim a refund or make other corrections. It is considered filed on the due date.

Once Form 1040-X is completed, submit it to the IRS. Electronic filing for Form 1040-X is available for certain tax periods, but paper filing remains an option. If mailing, send the completed Form 1040-X and any attached supporting documents to the appropriate IRS address found in the form’s instructions. Keep a copy of the signed amended return and schedules for your records.

After submission, you can track the status of your amended return using the IRS “Where’s My Amended Return?” tool online. Amended returns generally take up to 16 weeks to process.

Communicating with Your Tax Preparer

Addressing a tax error with the original preparer involves a direct approach. Before contacting them, gather all relevant documentation, including your original tax return, any amended return, and supporting documents that highlight the mistake.

A reputable tax preparer should review the identified error and assist with the amendment process. If the error was their fault, they may offer to cover any penalties or interest incurred due to their mistake. Many professional tax preparers carry errors and omissions (E&O) insurance, also known as professional liability insurance, which helps protect them from financial losses stemming from client lawsuits related to errors or negligence in their services.

If a preparer is uncooperative or refuses to acknowledge the error, you can file a complaint with the IRS using Form 14157, “Complaint: Tax Return Preparer.” This form allows you to report improper practices. Additionally, if the preparer is an attorney, Certified Public Accountant (CPA), or enrolled agent, you can report misconduct to their professional organizations, state boards of accountancy, or the IRS Office of Professional Responsibility.

Understanding Your Responsibilities and Outcomes

Even when a tax preparer makes a mistake, the taxpayer ultimately remains responsible for the accuracy of their tax return. When you sign your tax return, you are attesting to its correctness under penalties of perjury. While a preparer may be held liable for their negligence or misconduct, the primary financial obligation for any additional tax owed rests with the taxpayer.

Amending a tax return can lead to various financial outcomes. If the correction results in a decrease in your tax liability, you may receive a refund. If the amendment shows that you owe more tax, you will need to pay the additional amount. The IRS may assess penalties and interest on the underpaid amount, calculated from the original due date of the return.

The IRS offers a First-Time Penalty Abatement policy that may provide relief from certain penalties, such as failure to file or failure to pay, if you have a clean compliance history for the preceding three years. This administrative waiver is a one-time consideration. Maintain accurate records for at least three years from the date the return was filed or the due date of the tax return, whichever is later, for future reference and potential IRS inquiries.