{"id":2676,"date":"2022-04-29T15:37:33","date_gmt":"2022-04-29T19:37:33","guid":{"rendered":"https:\/\/www.skypointfcu.com\/wph\/workarea\/?p=2676"},"modified":"2022-04-29T15:37:50","modified_gmt":"2022-04-29T19:37:50","slug":"what-to-do-if-theres-a-mistake-on-your-business-taxes","status":"publish","type":"post","link":"https:\/\/www.skypointfcu.com\/wph\/workarea\/blog\/what-to-do-if-theres-a-mistake-on-your-business-taxes\/","title":{"rendered":"What to Do If There\u2019s a Mistake on Your Business Taxes"},"content":{"rendered":"\n

For small-business owners, preparing an income tax return is far from simple, which can increase the chances of making a mistake. Here are six steps that small-business pros say you can take to cope with that hair-on-fire feeling of discovering an error after you\u2019ve filed \u2014 plus how to get things fixed quickly so you can go back to running your business.<\/p>\n\n\n\n

1. Double-check your work<\/strong><\/p>\n\n\n\n

If you suddenly think something\u2019s wrong with the tax return you already filed, make sure there is in fact a mistake before taking further action.<\/p>\n\n\n\n

\u201cGo back to the original preparer and verify what you\u2019re seeing first,\u201d says David Klasing, a certified public accountant and attorney in Irvine, California. \u201cDon\u2019t just assume the return is off, because your analysis could be wrong.\u201d<\/p>\n\n\n\n

Also, make sure you gave the preparer accurate information, says DeLisa Clift, who is a mentor with the Savannah, Georgia, chapter of SCORE, a national nonprofit that offers free resources to business owners.<\/p>\n\n\n\n

2. Stay calm<\/strong><\/p>\n\n\n\n

If all you\u2019ve done is make a simple math error, the IRS\u2019s automated systems may catch it, fix it and send you a letter saying so, Clift says. If the math error means you underpaid or overpaid, the IRS will let you know that, too, she adds. If you can\u2019t afford an extra tax bill right now, you may have time because the IRS offers payment plans<\/a> that let people pay in installments.<\/p>\n\n\n\n

3. Figure out who\u2019s going to fix the mistake<\/strong><\/p>\n\n\n\n

If there\u2019s indeed an error on your tax return \u2014 and it\u2019s more than just you forgot to carry the one \u2014 figure out who will do the fixing. Your contract with your tax preparer may detail whether you or the preparer has to handle the work, Clift says.<\/p>\n\n\n\n

\u201cYou really shouldn\u2019t incur a cost if someone else has prepared your tax return for you,\u201d she says.<\/p>\n\n\n\n

4. Amend your tax return<\/strong><\/p>\n\n\n\n

Amending your tax return means filling out either an IRS Form 1040-X<\/a> or an 1120-X, depending on your business structure. Don\u2019t try to DIY it, Klasing says.<\/p>\n\n\n\n

\u201cThe preparation of a proper amended return involves so many steps that are counterintuitive,\u201d he says. Some of those steps include showing where and how your tax return changed, providing documentation explaining why you\u2019re amending your return, then remembering to actually amend your state tax return by filling out the new separate paperwork, if necessary.<\/p>\n\n\n\n

5. Get ready to pay<\/strong><\/p>\n\n\n\n

If the mistake resulted in you underpaying the IRS, the IRS may hit you with interest and penalties in addition to the taxes you mistakenly didn\u2019t pay. However, the IRS may give you a break on the penalties.<\/p>\n\n\n\n

\u201cReasonable reliance on a professional is grounds for penalty abatement<\/a>,\u201d Klasing says. But good luck getting your preparer to admit to an error.<\/p>\n\n\n\n

\u201cIf you can get the preparer to throw himself under the bus and say, \u2018You know what? This is my error, not the client\u2019s error,\u2019 you\u2019ve got two things: Number one, you got grounds for penalty abatement; number two, you\u2019ve got grounds for a malpractice claim. That\u2019s why it\u2019s so rare for them to do it,\u201d he says.<\/p>\n\n\n\n

6. Restrategize your filing habits<\/strong><\/p>\n\n\n\n

Once you\u2019ve fixed the error on your tax return, work on avoiding a repeat for next year<\/a>. First, consider setting aside more time to review your return before filing it. In the eyes of the IRS, you\u2019re personally responsible for everything on your tax return \u2014 even if someone else prepared it, Klasing says.<\/p>\n\n\n\n

\u201cPreparers make errors all the time, but you were under a duty to find those errors before you filed,\u201d he says.<\/p>\n\n\n\n

Second, you may want to review your relationship with your tax preparer. Some tax preparers may apply deductions or tax credits that you might find dubious, according to Klasing.<\/p>\n\n\n\n

\u201cThey feel if they get the lowest tax liability in town, they\u2019re going to have a line around the block,\u201d he says. \u201cIt happens all the time.\u201d<\/p>\n\n\n\n

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