How Long It Typically Takes the IRS To Reach Out If It Finds a Mistake on Your Taxes
Taxes can be a joyous time for those expecting a tax refund this year. They can also be a nerve-wracking time if you’re unsure about the return you just filed.
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If you’re looking for some reassurance this tax season because you’re worried you made a mistake, we’ve got you covered on everything you need to know.
Why Would the IRS Reach Out to You?
“The IRS will normally reach out to you if there is something on your tax return that doesn’t match their records,” said Michele Cagan CPA, who’s also published 16 books on personal finance alone.
This could be something such as forgetting to report IRS Form W-2 or an IRS Form 1099-MISC. It could also be something minor such as forgetting to report interest paid to you from an investment (Form 1099-INT) or reporting income from the forgiveness of debt like student loans (Form 1099-C). Another common reason the IRS may reach out is that while your tax return matches its records, it still doesn’t make sense.
“For example, if you have a salary of $30,000 for the year and you report you have $20,000 in charitable donations, that doesn’t make any sense.”
Another example could be a freelance writer who writes within a certain niche and your write-offs don’t make sense.
“If you write about finance, and you’re trying to deduct 20% of your income to travel costs, that doesn’t necessarily make sense so the IRS might call.”
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How Long Does the Irs Have To Reach Out To You About a Mistake?
“The time frame the IRS has to reach out to you about certain mistakes can be anywhere from 3 years to forever,” Cagan explained. “Usually if there is a critical number that doesn’t match, you won’t even be able to e-file your tax return as it will bounce right back.”
A critical number could be a W-2 you forgot. It could also be that one of the forms mentioned above doesn’t match what was reported to them.
The IRS will usually send a letter stating the mistake and the amount you owe or if it’s a return, a refund check. This is something that its computer system can figure out on its own. This usually happens between three weeks to six months. However, if the IRS is coming to you years later, it’s because a person looked at your tax return and has flagged it.
Is It Likely That the IRS Will Catch a Mistake on Your Return?
“The IRS system automatically looks at everyone’s return that they process to see if it matches. However, the IRS also has another program where they will randomly audit people every few years to see how easy it is for people to follow tax laws.”
If you are one of the unlucky few, a person will analyze every line of your return to see if it’s correct.
“This is done mainly with tax credits such as the earned income credit and child tax credit. It’s easy to make mistakes with these.”
Deductions that have a lot of different ways to qualify, unfortunately, are looked at the most. If this happens, the IRS will send a letter asking for verification and that’s that. But if the IRS is asking to meet in person, that’s a different story and a different reason.
When To Seek a Professional
Depending on the mistake, the IRS may look at additional returns to double-check. If you disagree and the IRS pushes back, that would be a time to call in a tax professional to help.
“If they want to meet you in person, you 100% want a professional to go in for you. As a matter of fact, you shouldn’t go because anything you say can be used against you. The IRS can make you feel uncomfortable and if you’re cracking jokes, they may take it seriously,” Cagan said.
Cagan emphasized that if the IRS requests to meet you in person, or even worse, meet you at your place of employment, you need a tax representative there and should allow them to do all of the talking on your behalf. Only enrolled agents (EAs), certified public accountants and attorneys are legally able to fully represent you when it comes to the IRS so it’s important to make sure that you have selected someone with the correct credentials.
“Other people can look at your stuff, such as your accountant can look at your return but not all tax preparers can speak to the IRS on your behalf.”
The best rule of thumb when it comes to filing your tax return is to find what way you feel comfortable with and go from there. Whether that’s using tax software on your own or finding an accountant to help, this will help you feel confident when it comes to Uncle Sam and your taxes.
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