This year, it’s especially critical to double-check your tax return’s math.
About 33% of Americans wait until the last minute to file their taxes. If you’re one of those people that files late, you might be in luck. If you file late this year, you will have the opportunity to learn from the mistakes of others.
Simple math errors appear to be the largest difficulty this year, with problems impacting requests for additional Child Tax Credit money, Recovery Rebate Credit and Earn Income Tax Credit.
Take a look at this: The IRS issued around 7.4 million math error warnings for stimulus payment problems between January 1 and July 15, 2021. More than 67 percent of the 11 million notices sent about math problems were due to pandemic-related stimulus concerns. This tax year, we’re not sure how many letters will be sent.
What you can do to help?
When you wait until the last possible moment to submit your taxes, you may feel pressured. Allowing a ticking clock to prevent you from double-checking your calculations is not a good idea.
Congratulations, you’re normal if double-checking your math isn’t your idea of a good time. Online tax software is one way that can help. Even if you pride yourself on doing your taxes personally, online software is excellent at spotting math mistakes. Consider it your tax editor, identifying any errors that could otherwise go unnoticed.
You could also employ a tax preparer, but they’re busy this time of year, and finding someone this late in the game may be difficult. If you don’t want to or can’t find a tax preparer, we recommend that you:
Make sure your arithmetic is correct, or use online tax software.
How might math errors be caused by stimuli?
Do you have any idea why the IRS handed out 67 percent of the math error notices last year?
If you get a letter from the IRS this year, it’s because your gross adjusted income (AGI) exceeded these figures in 2021, according to Fortune: If you’re a single filer, you’ll have to pay $75,000, $150,000 if you’re married filing jointly, or $112,500 if you’re the head of household.
Any stimulus monies distributed in 2021 will be based on your most recent tax return (presumably, 2020). You may be required to refund some or all of the stimulus cash deposited in your bank account if your income rises in 2021.
It’s not so much a math problem as it is a case of 2021 being better than 2020. Even so, the IRS will regard it as a mathematical error. Despite the fact that you did nothing wrong, you may still owe money.
The Recovery Rebate Credit is at the heart of other math mistake letters. To refresh your memory, the Recovery Rebate Credit was a refundable tax credit available to anyone who did not get their third stimulus payment when filing their taxes in 2021. If a filer earned too much to qualify for the stimulus payment, they may have received a math error letter.
Addition and subtraction the old fashioned way
Of course, a letter from the Internal Revenue Service informing you that a math error has been made may have nothing to do with stimulus funds, the Child Tax Credit, or any other pandemic-related concern. It’s possible that anything was incorrectly added or deleted. It happens all the time.
What if the IRS makes a mistake?
You might get a letter and find the IRS made a mistake. Your calculations are correct, and you made a mistake. The IRS advises consumers to call them at (800) 829-8374 to speak with a representative about their return.
While this sounds fantastic, it is not as simple as it appears. Due to understaffing and a backlog of tax returns, your chances of speaking with a live agent on your first attempt are slim. Nonetheless, keep trying. You have 60 days to appeal a math mistake letter, regardless of whether your letter states so (some mailings missed this piece of information).
It’s up to you to produce further material to prove to the IRS that you’re correct and that the initial finding should be overturned. You will lose all rights to dispute or reverse the charges if you do not contact them within 60 days.
The moral of the story is to handle the problem as soon as you receive a letter. Despite all we’ve heard about the IRS, it’s actually pretty willing to work with you to make things right. If you make a mistake, it’s probably not a major issue. It may take a few phone calls to resolve the issue, but after you’ve done so, you may move on to more essential matters.
More:
Updates on American Finances: Tax Refunds Are Being Delayed, and a Gas Stimulus Check Has Been Sent…
What Is the Status of the Gas and Inflation Stimulus Checks in Each State?
Update on the Fourth Stimulus Check: Who Will Get the Third and Final Payment?
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