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Bulletproof Your Tax Return to Avoid Costly Mistakes and IRS Audits

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David M. Brenner, ChFC®, CLU®

D. M. Brenner, Inc.
Phone : (858) 345-1001
Schedule a Meeting

It takes about nine hours for most people to do their taxes—more than enough time to mess something up.

Filing errors come in many forms. Taxpayers can forget to report interest, or make a math mistake. Fixing the problem before the Internal Revenue Service finds it can be a simple matter of filing a superseded return electronically, which avoids penalties and other grief.



If the IRS catches mistakes before you do, your tax season can quickly become more expensive and aggravating. Correcting mistakes can take weeks or months, and even minor errors lead to letters from the IRS or delayed refunds. Make a big enough blunder and you may raise red flags that trigger an audit.

There is no foolproof recipe for a flawless return, but tax pros say the best way to save yourself grief is not to rush. Make sure not to forget key forms and other documentation. One of the most common mistakes people make is filing returns before they have tax forms on hand, including 1099s for other income such as pay for a gig job or capital gains from investments. 

“I always suggest people look at their previous year’s return to look for what they might miss,” said Beth Logan, an enrolled agent in Cheltenham, Pa.

The IRS will let you know if it spots mistakes or any other issues after you file your return. Ignoring those letters can lead to a bigger bill and penalties. Things tend to spiral from there if you don’t pay up.

Since the pandemic, the IRS has had monthslong processing backlogs for amended returns and taxpayer correspondence. The agency is still processing individual taxpayer correspondence related to IRS letters and notices from last November, and it is working on amended returns filed on paper from last July. 

As of Dec. 9, it had 686,000 unprocessed individual tax returns, with 600,000 requiring error correction or special handling, and 844,000 unprocessed amended returns. 

This is not a race

There is no surefire way to 100% bulletproof your return, even if you use TurboTax or an accountant. But you can improve your odds. 

First, get all of the income reporting forms that get sent to you and the IRS such as W2 wage statements and 1099s for other income. 

This is especially important if you’ve gone paperless or if you’ve moved. You might have forgotten that you closed a bank certificate of deposit that earned $150 in interest. You would need to go into the old online bank account to download a 1099-DIV form.

Or you might have forgotten the unemployment benefits you received in January, and need to be on the lookout for a 1099-G. 

Remember, the IRS already has this information when you file your return. If something doesn’t match up, you will get a CP2000 notice, showing a proposed adjustment to your return. The amount you owe could drop or stay the same, or you could owe more.

“It’s like a surprise extra tax bill,” said Bill Smith, national director of tax technical services at CBIZ MHM in Washington, D.C. You might have to fight penalty assessments that are slapped on, he added.

Those notices aren’t always correct. If you forget to report a stock sale, the IRS will get the information on the proceeds, but that won’t include how much you initially paid. So you will need to write back with proof of that cost basis, which will reduce the tax owed.

Mistakes that can trigger an audit 

Taking inflated deductions can lead to inquiries from the IRS, tax professionals said. This could be business deductions for those with self-employment income reported on Schedule C, or deductions for medical expenses, charitable gifts or your home office.

How much is too much? That is hard to say, and the IRS doesn’t show its cards. The agency’s computers will crunch the numbers on your deductions relative to your income and compare them with other taxpayers with similar profiles.

“You want to make sure you’re substantiating positions before the IRS comes knocking at the door,” said Dustin Stamper, a managing director in Grant Thornton’s national tax office in Washington, D.C. 

This isn’t just a matter of what is on your tax return. If you don’t have the proper substantiation and the IRS asks for it, you could lose the deduction altogether, Stamper said.

In most cases of IRS scrutiny, the agency will initiate what’s known as a correspondence audit by mail where it picks out a single or limited number of issues for a single year to address. That could be questions about income from a rental property or how much money you have in a foreign bank account. 

In the rarer case of an in-person audit, the IRS can even come to your home. Nicole DeRosa, a certified public accountant with Wiss in Florham Park, N.J., had a client who had to invite an IRS agent into his home to successfully defend a home-office deduction that the IRS questioned.

When to file an amended return 

If you catch a mistake before the IRS does after the tax filing deadline, it usually pays to file an amended tax return, Smith said. 

“You’d rather be in the driver’s seat than sit back and wait for the IRS,” he said. You might owe taxes, penalties and interest, but the sooner you pay, the less you’ll owe in total. 

If you catch a mistake early enough, you can file what’s called a superseding return—one that is filed after the originally filed return but submitted before the due date, including extensions.

Don’t forget your state return, said DeRosa. It might be in your best interest to amend the state return, or you could wait for the state to issue you a notice. 

“It’s best to get ahead of it,” she said.

Key 2024 filing season dates

  • Jan. 29: Filing season start date for individual tax returns.
  • April 15: Due date to file 2023 tax return or to request an extension for most of the nation.
  • April 17: Due date for Maine and Massachusetts.
  • Oct. 15: Due date for extension filers.

Write to Ashlea Ebeling at ashlea.ebeling@wsj.com

David M. Brenner profile photo

David M. Brenner, ChFC®, CLU®

D. M. Brenner, Inc.
Phone : (858) 345-1001
Schedule a Meeting