If you ask the average person the question, they may have a hard time finding someone who likes filing taxes. When it comes to the process of filing an amended tax return, that number drops even further. In fact, in 2022 alone, almost 13,000,000 errors were found in tax returns, making modifications to the returns more necessary than ever.
With this in mind, it is vitally important to emphasize that you should never delay modifying a tax return due to fear or stress, especially when the modification process is so simple. There are various reasons why there may be a need to modify your return, from income that was forgotten, to simple administration errors, whatever the reason, it is mandatory to understand all the reasons to guarantee that your return is correct, and as accurate as possible.
Common Errors When Filing Your Taxes
Forgetting to report all sources of income
In certain cases, people may just forget to include all sources of income when filing an initial return, such as self-employment or a side job.
Inaccurate or missing 1099 forms: If you don’t receive all 1099 forms for work performed throughout the year (or receive the wrong forms), you may need to file an amended return.
Human error: Whether they come in the form of simple typos, an incorrect W-2 from your employer, or confusion regarding brokerage returns, errors are a very common cause of corrected tax returns.
Double report: Sometimes people or tax preparers mistakenly include the same source of income multiple times on different pages of their federal return. This problem can also arise if your employer or a financial institution reports a source of income that you also report. filed on your individual income tax return.
Changes in business income: It is a common point among both small businesses and large companies, finding expenses or income streams that were not reported, after you have filed your return may require you to file a tax return with corrections to account for additional taxes owed.
Scholarships or aid: The tax obligation in relation to scholarships and grants can be somewhat complicated, even for those who know the most about the subject of finances know that many of the statements with corrections are from students who have made simple mistakes, the money from the scholarships that they use to Tuition, for example, is clearly not taxable, while the same money that is used for living expenses may be taxable.
Income misclassification: Far from just forgetting to report some sources of income, certain people may misclassify sources of income, such as declaring income that is taxable as non-taxable or vice versa, this can make your return different to what the Internal Revenue Service expects based on what your employer or financial institutions report, which could lead to an audit and other problems.
Retirement Account Rollovers and Distributions: Typically, transferring money from one retirement fund to another can be done tax-free; however, It is important to pay special attention to avoid unwanted issues when carrying out the presentation of a statement. In contrast, many retirement fund distributions are subject to taxes, unless they qualify for certain exemptions.