More than 90% of individual tax returns are now filed electronically, and usually the process goes smoothly. When an e-filed tax return is rejected, however, e-filing can become more complicated.
Common causes for rejected tax returns
Simple filing errors. Most rejections are caused by things such as misspellings, typos on Social Security numbers, or missing forms. When an e-filed tax return is rejected, the IRS e-filing system sends back rejection codes. These codes are specific to lines on the tax return and descriptions of the problem are readily available. Most of these errors can be easily corrected.
Dependent errors. This error occurs when someone else has claimed a dependent on a previously filed tax return. This often occurs with divorced and unmarried couples who each claim the same child on their tax return. The IRS does not take sides in this situation, they simply accept the earlier-filed return and reject any subsequent returns.
Identity fraud. Someone else has already filed a tax return using your Social Security number.
What to do
Most errors are simple and easily corrected, which paves the way for resubmitting your tax return for e-filing without much additional delay. However there are two instances that require your immediate attention. When either of these occur, you may need to file your tax return via physical mail and work to correct the error for future tax filings:
1. Dependent errors. A dependent can only be claimed on one tax return. If a dependent is already claimed on another individual’s tax return you will need to provide proof that the dependent belongs on your return. If this happens, contact the other party who claimed your dependent and ask them to amend their return. Let them know that you’re filing your tax return correctly claiming the dependent. Your filing will target both tax returns for a potential IRS audit. This audit risk often is enough motivation to correct the problem.
2. Identity fraud. Criminals using stolen information submit tax returns electronically in an effort to steal your tax withholdings. Fraudulently claimed refunds are then automatically deposited into thieves’ bank accounts. Unfortunately, you may discover the theft when your e-filed tax return is rejected. If this happens to you:
- File a paper tax return.
- Include Form 14039: Identity Theft Affidavit with your tax return.
- Confirm your identity using the IRS Identity Verification Service or by calling the IRS.
- Mail your tax return using Certified Mail with Return Receipt Requested so you are certain of timely delivery.
- Immediately take steps to protect your financial information. The following link will take you to the Federal Trade Commission’s identity theft area for recommended steps to protect yourself: FTC Identity Theft Assistance
While solving the cause for a rejected e-filed tax return can be a headache, the sooner the problem is addressed, the sooner your refund can be received.
— By Nancy J. Ekrem, CPA
DME CPA Group PC
Certified Public Accountants & Business Consultants