Tax season is here again and that means many thousands of Ohio taxpayers are going to make mistakes on their tax returns that will require correction, often necessitating the filing of amended returns.
Mistakes on tax returns are fixable, but it’s better to avoid them in the first place to avoid potential headaches and penalties.
Experts they say there are some common errors and omissions that Ohioans can steer clear of by being careful or using computer software or reputable tax preparers.
“You have many options on how to fix a mistake on your tax return depending on whether you received a notice, and the kind of mistake you made,” says the Taxpayer Advocate Service.
The Internal Revenue Service received and processed more than 5.9 million individual tax returns from Ohio in calendar year 2021 (1040 forms).
That year, the IRS received more than 183,000 1040-X forms from Ohio taxpayers, which are the documents people have to file when the federal government discovers errors and omissions on their returns.
The Ohio Department of Taxation received more than 5.8 million state tax returns in 2022, and nearly 42,200 had to be amended because of issues including errors and omissions, according to Gary Gudmundson, communications director with the Ohio Department of Taxation.
Dayton’s finance department last year processed more than 19,760 municipal returns, and about 20% of them contained errors that required adjustment, said Kena Brown, Dayton’s finance director.
About one in 10 tax filings the city processes each year are amendments of previously filed returns, Brown said.
What goes wrong
The IRS discovered more than 12.9 million math errors on individual income tax returns filed in 2021.
The agency sent notices to about 12.3 million taxpayers about their errors. The number of math errors increased more than tenfold compared to the prior year, which the IRS says was overwhelmingly due to mistakes related to the recovery rebate credit.
The IRS received more than 5.8 million amended returns (1040-X documents) nationwide in calendar year 2021.
The IRS says it will correct minor math errors without requiring taxpayers to file amended federal returns, said Lisa Greene-Lewis, a certified public accountant and tax expert with TurboTax, a company that processed 47 million U.S. tax returns last year.
The IRS also may accept some returns that do not have certain forms or schedules that are supposed to be included.
But taxpayers must file 1040-X documents when there is a change in taxpayers’ filing status, income, deductions, credits or tax liability.
Commonly, some people use information from the wrong tax tables or schedules, or they make addition, subtraction or division errors, according to H&R Block.
Sometimes taxpayers fail to include information on their returns that are needed to substantiate an entry, H&R Block said.
Miscalculation of income or taxes is usually the most common type of math error.
Tax-filers also need to select the correct filing status to ensure they are in the right tax bracket, and this also helps determine the amount of taxes they owe and the kinds of tax credits and deductions they can claim, experts said.
Other prevalent errors include filing too early without the proper documents; filing with missing or inaccurate Social Security numbers or misspelled names; and filing unsigned forms.
Big issues include misreporting income or incorrectly calculating a credit.
”If you need to report additional income (W2s, unemployment, etc.), change your filing status, claim missed tax credits and tax deductions (especially if you have a refund coming), then you do need to amend your tax return if it hasn’t already been accepted by the IRS,” Greene-Lewis said.
Failing to prepare and submit an accurate or complete return on time can result in penalties with interest, additional taxes or a reduced refund or none at all.
The IRS said taxpayers can avoid penalties by filing accurate returns and paying the taxes they owe by the due dates. April 18 is the filing deadline this year.
Ohioans should double-check information on their returns like the spellings of names, listed addresses and Social Security numbers, and income, withholding, refund and balance due amounts, said Gudmundson, with the Ohio Department of Taxation.
City of Dayton staff say common mistakes on municipal returns include failure to include supporting documentation, reporting incorrect income amounts and errors in claiming taxes withheld or payments made to the city.
“In most cases, adjustments are made by city staff at the time of processing, “ said Brown, the finance director. “In instances where documentation or other information is missing, the tax-filers are required to respond and submit what we require from them.”
The IRS and taxpayer advocacy organizations recommend that Ohioans use tax software and file their returns electronically when possible.
Computer programs can flag errors, notify taxpayers when needed information is missing and help identify credits and deductions they qualify for.
“E-filing is generally considered faster, more convenient and more accurate,” said the Taxpayer Advocate Service.
The IRS says using reputable and trusted tax preparers also can help prevent mistakes.
The IRS has a free file program that lets taxpayers use commercial electronic tax preparation software at no cost if they had an adjusted gross income of $73,000 or less. Free file options can be found here.
Tips for avoiding tax return mistakes
* File taxes electronically
* Use a reputable tax preparer or computer program
* Double-check math calculations, spelling of names and Social Security and bank account numbers
* Make sure tax return is signed and the right filing status is selected
* Don’t forget to collect and include all necessary forms.