Why Did the IRS Reject My Return With Error Code: -8028?

Understanding why the IRS rejects a tax return can be perplexing, especially when faced with error codes like -8028. This code signifies specific issues that need addressing before your return can be processed. Resolving these problems promptly is necessary to avoid delays in refunds or potential penalties.

Common Filing Status Confusions

Choosing the correct filing status significantly impacts tax liability, eligibility for credits, and deductions. The IRS recognizes five primary filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) with Dependent Child. Each status has specific criteria, and misunderstanding them can lead to complications.

A frequent area of confusion is the Head of Household status, which requires the taxpayer to be unmarried or considered unmarried on the last day of the year, have paid more than half the cost of maintaining a home, and have a qualifying person living with them for more than half the year. Taxpayers often mistakenly believe that merely supporting a relative financially qualifies them for this status, overlooking the residency requirement.

Married taxpayers face challenges when deciding between filing jointly or separately. While Married Filing Jointly often provides more favorable tax rates and credits, some couples choose Married Filing Separately to shield themselves from a spouse’s potential tax liabilities. However, this choice can limit access to credits and deductions, such as the Earned Income Tax Credit or the Child and Dependent Care Credit. Understanding the trade-offs is essential for accurate filing.

Discrepancies in Reported Income

Ensuring reported income matches IRS records is one of the most intricate challenges taxpayers face. Discrepancies often arise from failing to report all income streams, including wages, dividends, and self-employment earnings. Taxpayers may overlook income from freelance work or side gigs, especially without receiving a Form 1099-NEC.

The IRS uses a sophisticated matching system to cross-reference taxpayer submissions with information from employers, financial institutions, and other entities. Mismatches, such as discrepancies between a W-2 form and reported income, can trigger an error code. Taxpayers should carefully reconcile their records with all tax documents, including Forms 1099-DIV for dividends and 1099-INT for interest income.

Unconventional income sources, like digital platform earnings, cryptocurrency transactions, and rental properties, also require accurate reporting. Cryptocurrency trading, for example, must be reported as capital gains, following the IRS’s evolving guidelines. Similarly, rental income must be reported, with allowable deductions like mortgage interest and property taxes calculated accurately. Failing to account for these income streams can lead to penalties and interest on unpaid taxes.

Omitted or Incorrect Identification Numbers

Accurate identification numbers are crucial for processing tax returns. The IRS relies on Social Security Numbers (SSNs), Individual Taxpayer Identification Numbers (ITINs), and Employer Identification Numbers (EINs) to match returns with taxpayers and related entities. Errors or omissions in these numbers can lead to error code -8028.

Mistakes can stem from typographical errors or outdated information. For example, a legal name change after marriage may require an update to the associated SSN. Businesses must ensure their EINs are current, especially after structural changes like mergers. Inaccurate identification numbers can delay refunds and disqualify taxpayers from credits like the Child Tax Credit, which requires valid SSNs for qualifying children. Individuals using ITINs must renew them on time to avoid losing deductions and adjustments.

Conflict with Previously Submitted Returns

Conflicts with previously submitted returns can arise from amendments or multiple submissions for the same tax period. The IRS tracks each taxpayer’s filing history, and discrepancies between current and past submissions can trigger error code -8028. For example, taxpayers who file amended returns using Form 1040-X must clearly indicate changes to avoid confusion.

Amendments often involve adjustments to income, deductions, or credits, and these must align with the initial submission. Submitting more than one return for the same period, due to a software glitch or misunderstanding, can also create conflicting records. Resolving such issues promptly is critical to avoid penalties or interest on discrepancies. Submitting a single, accurate return is the best way to prevent conflicts.

Incomplete Dependencies or Credits Data

Tax credits and dependency claims are closely scrutinized, and incomplete or inaccurate information can prompt rejection codes like -8028. The IRS requires precise data to validate claims for credits such as the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), or education-related credits like the American Opportunity Credit. Missing or incorrect details, such as failing to provide a dependent’s Social Security Number or misreporting income thresholds, can lead to rejection.

The EITC has specific eligibility requirements tied to income limits, filing status, and the number of qualifying children. Taxpayers often miscalculate their eligibility by overlooking annual phase-out thresholds. For example, in 2023, the maximum adjusted gross income (AGI) for a married couple filing jointly with three or more qualifying children is $63,398. Incorrectly reporting income or failing to meet other criteria will flag the return. Similarly, the CTC requires accurate reporting of each qualifying child’s SSN and adherence to income limits.

Education credits like the Lifetime Learning Credit or the American Opportunity Credit also require detailed documentation. Taxpayers need Form 1098-T from eligible educational institutions and must ensure their income falls within the allowable range. For example, the American Opportunity Credit phases out for single filers with modified AGI above $80,000 and is unavailable at $90,000. Misreporting tuition payments, scholarships, or education-related expenses can lead to rejection or audits. Double-checking forms and supporting documentation ensures compliance and avoids delays.