Why Does My AGI Keep Getting Rejected on My Tax Return?
Discover common reasons for AGI rejections on tax returns and learn how to address discrepancies and filing inconsistencies effectively.
Tax season can be stressful, particularly when your Adjusted Gross Income (AGI) is rejected on your tax return. This common issue can delay refunds or even result in penalties if not addressed promptly. Understanding the causes of AGI rejections is crucial for accurate and timely filing. Let’s examine the common reasons behind these rejections and how to resolve them.
Inaccurate Prior-Year Data
Using incorrect prior-year data is a frequent cause of AGI rejections. The IRS relies on your previous year’s AGI to verify your identity. Errors such as transposed numbers or referencing the wrong tax document can lead to mismatches. Always double-check the AGI from your prior-year Form 1040 to ensure it matches IRS records.
If you filed an amended return (Form 1040-X) last year, the AGI on the original return may differ from the amended one. The IRS updates its records to reflect the amended AGI, but delays or errors in processing can create discrepancies. Confirm the AGI the IRS has on file by using their online transcript service or contacting their helpline before submitting your current return.
Discrepancies in Personal Information
Even minor mismatches in personal details—such as name, Social Security Number (SSN), or date of birth—can trigger rejections. For instance, if your name on the tax return doesn’t match the name on file with the Social Security Administration (SSA), your return may be rejected. This issue often arises after name changes due to marriage or divorce. Ensure all personal information is updated and consistent across documents.
Similar problems can occur with dependents’ information. If a dependent’s name or SSN doesn’t match IRS records, the return may be rejected. This is particularly common when dependents have undergone name changes or been recently added to the household. Double-check all entries and ensure they align with SSA records to avoid delays.
Inconsistent Filing Status
Choosing the wrong filing status can lead to discrepancies and rejections. Filing status options include Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er). Each has specific IRS criteria that must be met. For example, claiming Head of Household requires maintaining a home for a dependent for more than half the year. Misunderstanding the criteria can result in errors.
Changes in marital status, such as divorce or separation, can also lead to confusion. Taxpayers may inadvertently choose the wrong status without realizing the IRS determines status based on marital status as of December 31 of the tax year. Carefully review IRS guidelines and evaluate your financial situation before selecting a status.
Amended Return Conflicts
Amended returns can complicate current filings. Filing Form 1040-X to correct errors or omissions in a previous return changes figures like taxable income, deductions, and credits, including your AGI. These updates replace the original submission in IRS records.
If the IRS hasn’t processed your amended return yet, discrepancies may arise when filing your current return. Before proceeding, confirm that the IRS has updated its records. Use the IRS’s “Where’s My Amended Return?” tool to check the status and avoid potential conflicts.
Extension-Related Adjustments
Filing for an extension can create complications if not handled carefully. While Form 4868 grants additional time to file, it does not extend the deadline for paying taxes owed. Misunderstanding this distinction can lead to discrepancies in reported figures, including AGI, especially when estimated payments are involved.
Taxpayers who make estimated payments during an extension often misreport these amounts on their final return. If the IRS’s records of payments don’t match your return, it can result in AGI mismatches. Accurate reconciliation of all payments with IRS records is essential to avoid rejections.
Failing to finalize your return by the extended deadline may lead to penalties and interest, which can further complicate AGI calculations. For example, late payment penalties under Internal Revenue Code §6651(a)(2) accrue monthly on unpaid taxes, up to 25%. Keep meticulous records of payments and correspondence with the IRS during the extension period to ensure accuracy.
Duplicate Submission Issues
Duplicate submissions, whether intentional or accidental, can confuse the IRS and lead to AGI rejections. This often happens when taxpayers, uncertain if their initial submission was received, file again as a precaution. However, the IRS system flags duplicate filings, which can delay processing or cause rejections.
Technical glitches during electronic filing can also result in accidental duplicate submissions. For example, if you resubmit your return after a system error, the IRS may treat it as a duplicate. Confirm the status of your initial submission using the IRS’s “Where’s My Refund?” tool or by contacting your software provider before filing again.
Married couples filing separately may also encounter issues if they report overlapping income or deductions, such as mortgage interest or dependent care expenses. The IRS requires distinct and non-duplicative reports for each spouse. Clear communication and thorough review of both returns can prevent these errors.
By addressing these common AGI rejection causes, you can streamline your tax filing process and avoid unnecessary delays or penalties.