In any given year, approximately 90% of tax returns are filed electronically, and normally everything goes smoothly. But there are still instances when minor issues, or even major problems, can pop up.
You may have had your e-filed tax return rejected immediately because of simple human errors, like mistyping your name so that the taxpayer name doesn’t match the Social Security number on file. That’s easy enough to fix in the moment. Unfortunately, it’s also possible for a tax return to be accepted initially only to be rejected later during processing. This could happen weeks or even months after the return is filed.
How to Handle Rejected Tax Returns
It's important to note that the IRS should provide you with an explanation of why a return was rejected, whether it's immediately or during processing. The next step is to take that notice request and start correcting the errors. Then you’ll need to resubmit your return for processing.
Some of these corrections are trickier than others. For example, you might be dealing with a dependent error. The IRS usually runs into these problems among unmarried or divorced couples who both try to claim the same child as a dependent. The person who filed first will then cause the other person’s return to be rejected. The IRS does not mediate between parties in these situations, so before you send in a corrected return, you’ll need to make sure that everyone is on the same page and not breaking any agreements related to the divorce or other previous arrangements. Otherwise you’ll miss out on those deductions altogether.
The IRS may also reach out to taxpayers who have filed the wrong forms to support their overall tax return and claimed deductions. In those instances, they’ll tell you what’s missing. Then it’s just a matter of completing the documents they actually need.
There could also be issues related to your calculations. If the IRS has found errors on any fields of your tax return, you’ll need to correct them and then add your initials or signature, as well as the date of the change before resubmitting the return. It never hurts to contact a tax professional to make sure you don’t make the same mistakes twice.
To make matters worse, you might be facing a case of identity fraud. Someone else could have already filed a tax return using your Social Security number in order to collect your own tax return. Not only will you be out of that money, you’d also need to go through the trouble of verifying that nothing else has gone amiss with your accounts. The sooner you act, the better. Identity fraud can quickly spiral.
It Never Hurts to Get Some Help
Working with a local accounting company can be incredibly helpful when a tax return is rejected. You don’t have to sift through those details all on your own. CPAs are trained professionals who have extensive knowledge of tax laws and regulations. They can help identify the reason for the rejection and provide guidance on how to correct the issue. Even better, they can help expedite the process.
Accountants and tax professionals will often act as a liaison between the taxpayer and the IRS and work to quickly send any necessary information or documents to the IRS. This is crucial because there may be penalties or fees associated with correcting and resubmitting the return.
What’s more, reaching out to a CPA firm can give you the opportunity for additional tax planning and advice on how to optimize your tax situation and potentially minimize your tax liability in the future.
