Small mistakes like transposing a number usually aren't the end of the world, but when they happen on your taxes, they can be a big problem. Errors like this could cost you money or bring the IRS after you if the mistakes lead the government to believe you're trying to cheat it, and no one wants that to happen.
Yet mistakes on tax returns are more common than many people realize. The IRS found nearly 2.45 million math errors among 2017 tax returns, the latest year for which data was available. Here's a look at what some of those errors are, how to avoid them, and what to do if you realize you messed up on your taxes.
Common tax errors
Tax calculation errors were the most common mistakes reported by the IRS in 2017. This is a broad category that refers to many possible errors, including simple things like forgetting to include a source of income that you earned or accidentally transposing some numbers on your return.
Claiming the wrong filing status or the wrong number of dependents on the W-4 you submitted to your employer can also cause problems. Your filing status determines your standard deduction and your tax brackets, and choosing the wrong one could cost you money or send up a red flag with the government. Here's a detailed guide to choosing the correct tax filing status if you're unsure which to use.
The number of dependents you claim determines how much money is withheld for taxes from each of your paychecks. A larger number of exemptions means you have less money withheld. But that doesn't change how much you owe at the end of the year. If you claim more exemptions than you should have, you could end up owing taxes. And if you didn't claim enough exemptions, you'll get a larger refund, but you probably would've been better off having that extra money each month rather than getting it in a large lump sum.
Claiming tax credits and deductions you don't actually qualify for is another common problem. Sometimes this results from a misunderstanding of the qualification requirements for the credit or deduction, while other times it can be a deliberate attempt to hide money from the government. Many credits and deductions are based on your adjusted gross income (AGI), which is different from your total income for the year, so bear this in mind when determining whether or not you qualify for certain tax breaks.
How to avoid errors on your tax return
The best way to avoid errors on your return is to go through it slowly and methodically, double-checking everything to look for small, accidental errors. You should also look over your complete tax return one final time before you submit it. Consider doing this at a later time; a fresh set of eyes gives you a better chance of catching errors you may have missed before.
If you're unsure whether you qualify for a tax break or how to fill out a certain section of your return, consult a tax professional or someone else who knows more about taxes than you do. If you're using tax filing software, the provider may have representatives who can answer your tax questions. Never guess on how to fill something out or what answer to choose; being wrong could be costly.
What to do if you made a mistake on your taxes
The IRS will usually fix small, harmless math errors for you if it finds them. But if you notice that you made a big error, like forgetting to report income, you don't have to wait for the IRS to come asking questions. You can fix the problem yourself by filing an amended tax return on Form 1040-X.
The process is simple: Fill out a 1040-X form, complete it, and mail it to the IRS. Unfortunately, electronically filing an amended tax return is not possible. If you realize you made an error on your state taxes as well, check with your state's revenue department to see what form you have to fill out and then mail this along with your amended return to the appropriate state agency.
You can track the progress of your amended tax return using the Where's My Amended Return? tool on the IRS website. It can take up to three weeks for the amended return to reach the IRS and another 16 weeks for processing, so don't worry if the IRS doesn't appear to have it right away.
Check your return carefully before you submit it, but if you still make a mistake on your taxes, it usually isn't too difficult to deal with. Just file an amended return if you notice a serious problem on your first one.