The American tax system is one of the most complex and cumbersome in the world. With the maze of forms, it is easy to overlook something and make mistakes. Rather than deal with the headache, many Americans choose to hire a professional. But what should you do when a professional botches your return? The important thing is to stay calm and make a plan to fix a tax preparer’s mistake. Here are a few suggestions if you notice a discrepancy.
Discovering a Mistake
Before you file your return, it is your responsibility to look it over carefully. Even professionals make mistakes sometimes. It is up to you to check their work and ensure the accuracy of your return. Ultimately, you will be the one who pays the price in penalties, overlooked deductions, or missed refunds. Don’t be too trusting or complacent when it comes to your finances. It could cost you more in the long run.
Plan of Action
If you do find a mistake on your tax return, you can re-file an amended return. However, before you barge into the tax preparer’s office, look over your contracts and paperwork. If you signed an engagement letter, there may be terms included that protect you. Be certain that you understand what needs to be fixed and that you have all necessary documentation to correct it.
Ask Your Tax Preparer
In most cases, errors are usually the result of an honest oversight. Any reputable service will take the necessary measures to fix a tax preparer’s mistake. Additionally, you can ask them to cover any associated costs if they are at fault. Many professionals will offer to compensate you for any penalties and negotiate with the IRS on your behalf. However, not all tax preparers have the credentials to negotiate forgiveness or reductions.
File an Amended Return
The IRS understands that the tax codes are complex. If you made a mistake, you are definitely not the first person to do so. The re-filing process is very straightforward. Just file using Form 1040X and include any additional documents that are required. It is important to note that you don’t need to re-file the entire tax return, only the affected forms. Once you fill out the forms, simply submit it to the IRS.
If you suspect negligence or more sinister intentions, then you do have legal options you can pursue. If there has been serious misconduct or fraud, you can file a complaint directly with the IRS. Form 14157 and Form 14157-A are available for download on their website. Just fill out the forms and attach your signed affidavit. After that, the IRS will take over and open an investigation with the tax preparer. If they discover any wrong doing, the guilty party will lose their individual tax preparer identification number. Furthermore, they may face actions from state regulatory bodies.
The last resort is to sue for compensation. The courts may offer some financial relief, but consider the costs in both time and money. Depending on how much it is, legal action may not be worth the expense or energy. Weigh the benefits and seek legal counsel if necessary. And remember, everything will get sorted with time. Finding a mistake in your tax return isn’t the end of the world. Do you your homework and figure out which steps you need to take to fix a tax preparer’s mistake.
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Jenny Smedra is an avid world traveler, ESL teacher, former archaeologist, and freelance writer. Choosing a life abroad had strengthened her commitment to finding ways to bring people together across language and cultural barriers. While most of her time is dedicated to either working with children, she also enjoys good friends, good food, and new adventures.