The recently-completed filing season of 2012 saw a number of errors made by both individuals and preparers. The large majority of these mistakes were made on paper returns as opposed to e-filed returns and far fewer mistakes were committed by preparers than individuals. The IRS have released a report on the common mistakes.
Above all some of the most frequent mistakes included errors in the amount of taxable Social Security benefits and tax amounts calculation errors and errors in tax rates for qualified dividends and capital gains. Some returns also lacked claims for Making Work Pay and Government Retiree Credit. The IRS also released a list of the most common errors in specific paper filed returns.
One of most common errors for the 1040 was taxable amounts of Social Security benefits with more than 7000 individuals making mistakes in comparison to just 662 of preparers. Other common mistakes paper-filed 1040s were changes in taxable amounts due to qualified dividends and capital gains and a lack of or errors in regards to Self Employment tax. In addition there were 1133 returns with errors from preparers in declaring the right to claim Making Work Pay and Government Retiree Credit and a further 793 with dependents’ last names that were not consistent with IRS or Social Security Administration records.
Mistakes for the 1040As once again included taxable amounts of Social Security benefits but also had 1445 errors reporting tax based on taxable income and filing status and computation. Further common errors were changes in taxable amounts due to qualified dividends and capital gains mistakes reporting right to claim Making Work Pay and Government Retiree Credit lack of or incorrect Social Security numbers and ITINs and incorrect last names when filed by preparers.
Lastly to be reported by the IRS were mistakes on the 1040EZs. The most seen errors were in taxable income and filing statuses subtraction of exemption combining standard deduction and exemption amounts and once again rights to the Making Work Pay and Government Retiree Credit. There were additional mistakes in regard to Earned Income Credits and miscalculations.
E-filed returns saw far fewer errors with just 593 mistakes in how much was registered as taxed and paid on Schedule A and a further 226 mistakes in amounts considered taxable for Social Security benefits.
So what happens if you make an error when filing your taxes? If you discover the mistake we suggest filing an amended tax form (Form 1040X) immediately to reduce potential interest and penalties. If the IRS contacts you in the form of a tax notice review the notice and compare the items found by the IRS to the tax return filed. You can then determine the best approach to communicate with the IRS. Dealing with the IRS can be a daunting experience contact Lindemeyer CPA for help making it a better experience.