Tuesday, 21 March 2023

Will a Math Error on Your Tax Return Trigger an Audit?

by Earn Media

Will a Math Error on Your Tax Return Trigger an Audit?

Image source: Getty Images

Filing taxes can be stressful enough in its own right. Throw in the idea of getting audited, and you might really be filled with dread.

Now, the good news is the IRS audits less than 1% of tax returns each year. So all told, your chances of getting audited aren’t very high to begin with. But there are certain red flags that have a tendency to trigger an audit. Math mistakes, however, generally don’t fall into that category.

What happens when you botch your math on your tax return?

The IRS will generally try to correct math errors on tax returns rather than audit or reject them. This might delay your refund, if you’re due one, but it could save you a hassle.

However, a series of math errors, or an innocent math error that comes across as a questionable deduction, could be enough to trigger an audit. So it’s best to avoid math mistakes to your best ability.

If the IRS does spot a math error on your return, it will often send you a notice in the mail proposing an adjustment to your taxes based on correct math. You may need to sign that letter agreeing to the proposed adjustment for the IRS to process your refund, or to bring the matter to a close.

In some cases, the IRS might ask for supporting documentation because your math doesn’t make sense. This doesn’t mean you’ll get in trouble for incorrect math. In this situation, you’ll have an opportunity to respond in writing to the IRS explaining the situation. You can simply tell the IRS where your numbers went wrong and present the correct ones.

What mistakes might lead to an audit?

If you transpose numbers or add up figures incorrectly, it may not trigger an audit. But if you miscalculate deductions to the point where they don’t make sense, that’s a different story.

In this situation, you’re not necessarily in trouble with the IRS. You just need to remedy the situation.

Let’s say you’re self-employed with an income of $70,000, and you meant to claim a $14,000 deduction on your tax return but instead claimed $41,000 because you transposed your numbers. That’s likely to trigger an audit simply because a $41,000 deduction against a $70,000 income looks disproportionate. But in that case, you’d just respond to the IRS letter you receive with an explanation and change your deduction to a lower amount.

How to avoid math errors on your tax return

One of the easiest ways to avoid math mistakes on your taxes is to file electronically. Using software will generally prevent addition and subtraction mistakes, though software won’t prevent issues with you copying over the wrong numbers from your tax forms.

Just as importantly, refunds for electronically filed returns are commonly processed in half the time it takes to do so for paper returns. So if you’re eager to see your refund hit your checking account as quickly as possible, then it pays to rely on electronic software rather than paper, a pen, and your own imperfect math skills.

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