Why Was My Federal Return Rejected and How Can I Fix It?

Filing a federal tax return is an annual task that demands precision. Even minor errors can lead to rejection from the IRS, leaving taxpayers to identify and correct mistakes. Understanding common reasons for rejection can help ensure timely processing and avoid penalties.

Mismatched Names or Social Security Numbers

Discrepancies between names and Social Security Numbers (SSNs) on tax returns and Social Security Administration (SSA) records frequently cause rejections. These errors can result from typos, name changes due to marriage or divorce, or incorrect SSN entries. The IRS cross-checks tax returns with SSA records, and inconsistencies trigger rejections.

To resolve this, taxpayers should confirm that the name and SSN on their return match their Social Security card exactly. For those who recently changed their name, updating SSA records before filing is essential. This requires submitting Form SS-5, Application for a Social Security Card, along with the necessary documentation.

Repeated Dependent Claim

A repeated dependent claim arises when multiple parties attempt to claim the same dependent, often in shared custody situations or among family members providing support. Tax law permits only one taxpayer to claim a dependent in a given tax year.

In cases involving divorced or separated parents, the custodial parent generally claims the child. However, the non-custodial parent can do so if the custodial parent provides Form 8332 to release their claim. Taxpayers should communicate clearly to avoid duplicate claims.

To correct this issue, confirm the right to claim the dependent and ensure no other taxpayer has done so. If a mistake occurred, file Form 1040-X, Amended U.S. Individual Income Tax Return, to correct and resubmit.

Incomplete Required Forms

Submitting incomplete tax forms is a common reason for rejection. The IRS requires specific forms to validate claims, deductions, and credits. For example, taxpayers claiming the Earned Income Tax Credit (EITC) must include Form 8867, while those seeking education credits need Form 8863. Missing schedules, such as Schedule C for business income or Schedule SE for self-employment tax, can also lead to rejection.

Taxpayers can avoid this by thoroughly reviewing their returns and consulting IRS Publication 17, which outlines filing requirements.

Conflicting Income Details

Accurate income reporting is critical. The IRS verifies income with third-party documents, such as W-2s, 1099s, or K-1s. Discrepancies between reported income and these documents often result in rejection. This issue can occur when taxpayers overlook income from side jobs or freelance work.

Underreporting income can lead to audits or penalties, including a 20% penalty for negligence. To avoid this, taxpayers should use accounting software to reconcile income and ensure consistency with IRS records. Reviewing IRS Form 1099 instructions and Publication 525 can help ensure all income sources are properly reported.

Invalid Digital Signatures

Digital signatures are essential for electronically filed returns. The IRS requires taxpayers to sign using a self-selected PIN or an Identity Protection PIN (IP PIN). Rejection often occurs due to missing or incorrect digital signatures, including errors in IP PIN entry or outdated credentials.

Victims of identity theft must use an IP PIN for added security. If it’s entered incorrectly, the return will be rejected. Taxpayers can retrieve or reset their IP PIN through the IRS’s online tool, which requires verifying personal and financial details.

Taxpayers should ensure their electronic filing credentials are current and accurate. Tax preparers should also verify that their software complies with IRS standards to avoid issues.

Prior Filing Discrepancies

Unresolved issues from previous tax filings can complicate current-year returns. For instance, discrepancies related to amended returns or unpaid balances from prior years can cause rejection. Another common issue involves failing to reconcile advance payments of the Premium Tax Credit (PTC) from prior years by filing Form 8962.

To address discrepancies, taxpayers should review their IRS account transcripts, which detail past filings, payments, and adjustments. These transcripts can be accessed online or requested using Form 4506-T. By aligning their records with IRS data, taxpayers can resolve inconsistencies and ensure smoother processing.