Why the Information on Your Tax Return Doesn’t Match IRS Records?
Tax season is upon us, and many people are starting to file their tax returns. However, what happens when you submit your tax return and the information on it doesn’t match up with what the IRS has on record? There could be a variety of reasons for this, and it’s essential to understand why it happens and what you can do about it.
Reasons for Discrepancies
There are various reasons why the information on your tax return may not match the IRS records. Here are a few common ones:
1. Typos or Errors in the Reporting
One of the leading causes of discrepancies is typos or errors in the information reported on your tax return. A simple mistake such as typing a wrong social security number or omitting a digit can cause significant problems.
2. Mismatches in Income Reporting
Income discrepancies usually happen when an employer reports different information to the IRS than what an employee reported on their tax return. In such cases, the IRS receives two different and conflicting reports.
3. Missing Forms
Missing forms, such as W-2s or 1099s, can cause discrepancies. When you don’t receive the required forms from your employer or contractor, you might not have the necessary information required for accurate reporting.
What Happens When There is a Discrepancy?
When there is a mismatch, the IRS usually sends a notice to the taxpayer with details of the discrepancy and requests them to correct the error. The notice will include instructions on how to respond and how much time you have to take corrective action.
If you don’t correct your return or respond within the specified time, the IRS may start an audit or adjust your return automatically. It’s critical to respond within the specified time to avoid any further consequences.
What You Can Do to Avoid Discrepancies
To avoid discrepancies and potential issues with the IRS, consider the following tips:
1. Keep Accurate Records
One of the best ways to avoid discrepancies is to keep accurate records of all your income, expenses, and deductions. This record-keeping can be in the form of receipts, bank statements, or any other relevant documentation.
2. Check and Double-Check Your Return
Before submitting your tax return, ensure that you check and double-check all your entries for accuracy. Avoid rushing through the process, and don’t forget to proofread your return before submitting it.
3. Report All Income and Assets
Ensure that you report all your income and assets, including those not reported on a W-2 or 1099. Failure to report all your income could result in penalties and interest as well as an audit.
Conclusion
Discrepancies in tax return information happen for various reasons. Ensure that you take the time to check your records and double-check your tax return to avoid such discrepancies. Keep all relevant records and report all your income and assets to increase your chances of submitting an accurate tax return. Contact the IRS if you receive a notice of discrepancy, and they will guide you through the next steps to take to correct the error.
