My Tax Preparer Made a Mistake: What Can I Do?

By law, you are responsible for your own tax return, even if you hire someone else to complete it. Therein lies one of the major contradictions at the heart of the personal filing system. While lawyers and accountants dedicate their careers to understanding the tax code, even they sometimes get it wrong. However, Congress and the IRS still require you to get it right every time, and on time, too. That means if you hire a tax preparer to help with this complicated process and they make a mistake, the IRS will still hold you responsible for correcting that error. Here is what you need to know if this happens to you.

A financial advisor specializing in tax planning can help optimize your portfolio to lower your tax liability.

How to Identify a Tax Preparer Error

Even experienced professionals can make mistakes on a tax return, but catching them early can save time, money and stress.

Before filing, it’s wise to review your tax documents line by line to ensure accuracy. Begin by comparing the numbers on your Form 1040 to your W-2s, 1099s and bank statements. If you spot missing income, math errors or unfamiliar deductions, flag them immediately.

There are several common red flags typically found on a Form 1040.

Unexpected refund or balance due. If your refund looks much larger – or smaller – than usual, double-check the math and underlying entries.
Missing income forms. Confirm all W-2s, 1099s and other income records are included in the return.
Math discrepancies. Even small calculation errors can affect your total tax liability.
Incorrect filing status or dependents. These can change your tax bracket, credits and refund.
Missed deductions or credits. Forgetting deductions like the Child Tax Credit or Earned Income Tax Credit can cost you hundreds or thousands of dollars.
Wrong bank account or routing numbers. This can delay or misdirect your refund.

Before signing, always request a full copy of your completed return. A careful review is the easiest way to spot problems before the IRS does.

Avoid Panic in Case of Error

First things first, remain calm.

When dealing with the IRS, the golden rule is good faith. Be honest, disclose all of your known income and don’t invent expenses that didn’t happen.

The IRS understands that people often make mistakes on their taxes, so most punitive measures are generally off the table as long as the IRS doesn’t think you are deliberately lying. In particular, hiring a tax preparer is generally considered a per se indication of good faith on your part. This is often called acting on the advice of counsel among lawyers.

The agency will still bill you, including for any associated interest and fees, but as long as you aren’t committing deliberate fraud, they’re unlikely to impose serious fines, and you won’t be arrested. The IRS will even typically work with you on a structured payment plan if you aren’t able to pay everything all at once.

When to File an Amended Return

There are several ways that a tax error can crop up.

If you discover the error before receiving an IRS notice, you will need to file an amended return. This is an updated filing that corrects a material mistake. You will likely want to file an amended return if you overpaid your taxes, since that means you’re owed money back.

To make an amended return, you will file Form 1040-X with the updated and corrected information. You must pay any additional amount that you owe, or you will receive a refund for any amount you overpaid after the IRS accepts the new numbers. Typically, you can file an amended return up to three years after filing the original return or up to two years after you paid the tax, whichever comes later.

In all cases, you will still be responsible for any underpayment, even if your tax preparer makes a mistake. While you can pursue reimbursement for any penalties and fees caused by your tax preparer’s mistake, you can’t make them pay the actual tax bill.

Correction Letters and Audits

A tax filer reading a correction letter from the IRS.

If the IRS discovers an error, you will usually receive one of two responses:

Correction letter
Audit notice

In most cases of simple error, the IRS will send a correction letter. This notifies you that the IRS believes you accurately represented your finances but either made a miscalculation, left something out by accident or misapplied the tax code. The letter will state what the IRS believes you owe, along with any applicable interest and fees.

If you receive a correction letter, immediately review your taxes. For small amounts, it may be easiest to simply make a payment. If you still have confidence in your tax preparer, you can ask them to review the filing. If you think they are unreliable, ask a new accountant to conduct the review.

From there, you should make a payment if you think the IRS is correct. If you think the IRS is mistaken, ask your paid preparer to discuss the matter with the IRS directly, or you can call yourself if you prepared your own taxes.

In cases of more serious error, the IRS may send an audit notice. (While some random audits are still conducted, these are less common.) Generally, the agency does this when it finds a problem with your financial information and has reason to doubt the income, expenses or other substantive facts claimed in your tax filing. To correct this, the agency may review additional documents, such as your receipts and bank accounts, to compare them with your tax forms.

If you receive an audit notice, it’s wise to speak with a tax professional immediately. You can either use your existing tax preparer or find someone new, depending on your confidence in their services.

You may be able to resolve this issue by filing an amended return, but audits are very case-specific and best resolved with professional advice.

What to Do in Case of Serious Error

Although rare, a tax preparer may occasionally make a serious error on your filing.

When this happens, it can be important to move quickly. Serious errors can result in extra expenses that can stem from a lengthy audit or penalties involved with the appearance of impropriety. If this has occurred due to your paid tax preparer’s mistake, you do not want to get stuck with the bill.

If you believe that your tax preparer’s mistake was inadvertent and not intentional, speak with them first. Ideally, they will voluntarily correct the mistake and reimburse you for any costs involved.

If your tax preparer is not willing to help you correct the error or you suspect misconduct, you should immediately speak with another tax professional. Work with the IRS and your new tax pro to correct the error and try to negotiate down any fines or penalties.

From there, you have two remaining issues to resolve.

In the case of misconduct or a serious mistake, report your tax preparer to the IRSusing Form 14157 and Form 14157-A. The IRS may then take steps to penalize the tax preparer or revoke their ability to act as a paid preparer.
If this mistake has cost you a lot of money, you can speak with a lawyer about suing your tax preparer. This is a significant undertaking, so only pursue a lawsuit if very large amounts of money are involved. At the same time, don’t shy away from the fact that you are likely entitled to reimbursement.

Types of Tax Preparer Credentials

Not all tax preparers are equally qualified. Understanding the different types of tax credentials can help you choose and hold accountable the right professional.

Certified Public Accountants (CPAs). Licensed at the state level, certified public accountants (CPAs) undergo rigorous exams and continuing education. Many specialize in taxation and can represent you before the IRS in audits or appeals.
Enrolled Agents (EAs). Federally licensed by the IRS, Enrolled Agents (EAs) are tax experts who can represent taxpayers in any state. They must pass a comprehensive IRS exam or have prior IRS experience.
Tax attorneys. These professionals are licensed lawyers with specialized tax law training. They are typically best for high-stakes or legal disputes, such as fraud investigations or complex audits.
Uncredentialed preparers. Some tax preparers may not have any professional designations. While many are competent, they’re not required to maintain continuing education or adhere to professional standards. They also are limited in their ability to represent you before the IRS.

Some returns are more complex than others, such as those involving business income, multiple states or investment property. In these cases, it is generally safer to work with a credentialed preparer who not only understands tax law more deeply but is also held to professional standards that can protect you if something goes wrong.

Bottom Line

A tax filer is concerned about a mistake that her tax preparer made.

If your tax preparer makes a mistake, you are responsible for making any corrections and remaining payments. How you deal with this depends entirely on the scope and nature of your tax preparer’s mistake, as well as the response it generates from the IRS. Be sure to act promptly and speak with a tax professional who can provide the best guidance based on your individual situation.

Tax Preparation Tips

If you want to figure out how much you could owe in taxes, SmartAsset’s free income tax calculator can help you get an estimate.
A financial advisor who specializes in tax planning can help optimize your investments and retirement plan to minimize taxes. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.