Here’s what happens when you make a mistake on your taxes
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Our tax experts are answering Yahoo Finance viewer questions as we hit the homestretch for tax day. Filing season is in full swing, and the April 15 deadline is fast approaching. That can mean panic and hastiness, and a lot of filers are worried about making a mistake.
If the fear of failure has you petrified and putting off your filing, Ebong Eka, a CPA with EKAnomics Tax Relief, has some calming advice for you. He answered a reader’s question about whether filing returns is worth doing at all.
Will I get penalized if I make a mistake on my tax return?
Most small mistakes shouldn’t cause you too much concern, Eka says — as long as you’re being honest.
“If it's egregious — in that you chose to evade tax — that's a bit different. People go to jail for evading taxes,” he says. “But if you make a mistake — whether it's a number error or maybe a calculation error — the IRS would basically adjust your return and then send you a bill for the difference or send you the money if it results in a refund.”
What triggers an audit?
Some filers worry that making a mistake on their return could trigger an audit, but Eka still says you shouldn’t be too concerned.
“The IRS wants to make sure you're reporting all your income, and they also want to make sure you're not over-reporting your expenses,” he says.
Individuals who have a cash-based business or a small business with excess expenses deducted can trigger an inquiry or audit, but “it’s not common for the average taxpayer because the average taxpayer has a W2, their mortgage interest and property tax,” Eka says. “It's very basic and the computers take care of that already, so once you e-file, you tend not to have a problem.”
If you have tax questions, send them to us at moneyquestions@yahoo.com.
Follow Ned Ehrbar on Twitter.
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