Tax Errors - How To Get Money Back?

Question

If a tax preparer makes a mistake (calculating errors) and I pay too much tax, how does it work? Will the US Tax Department give me my money back, or does the tax preparer’s liability insurance company have to pay for my financial lost?

Answer 1

First of all, make your preparer aware of this. Major tax prep firms deal with this (unfortunately) regularly, either due to our error or because of missing info from the taxpayer. If you've paid too much, you can choose to either get a refund now, or have it applied to next year's tax liability.
The great thing is that if you had this done by a reputable firm, they will walk you through it, and ensure that the proper forms are filed if necessary. Give them an opportunity to fix their error and make things right. IF THEY DON'T, run don't walk out of there and get thee to someone who does. I work in the field, and it is one of my biggest pet peeves when preparers don't back their work. everyone, even those with tons of education, makes mistakes. The problems arise when we don't hold ourselves accountable and fix them - and apologise profusely.
If you need help, let me know. I AM NOT soliciting business, but I have resources to find someone good in your area who could help you at little or no charge, assuming the original preparer doesn't.

Answer 2

Im actually just restating what thylawyer already said. But, first of all, be carefull what information you collect off of yahoo answers. As you can see, the first slew of answers (before thylawyer) were from individuals with little or no tax knowledge at all and really have no business responding in this category whatsoever. If this is an IRS issue with a federal return, you need to file an amended return (1040X). I would suggest not having the same tax preparer do it, unless you are covered under some sort of service contract that states that they have to fix the errors and amend the return free of charge. I doubt the preparer’s surety bond or insurance company will cover any losses because of overeported tax liability. Do not wait for the IRS to make any adjustment, because if you overpay your taxes and do not claim the correct refund, they will simply not tell you and wait for the 3 year statute of limitation for collection of a refund to run out.

Answer 3

If the only errors are math errors, the IRS computers will automatically correct the amounts and issue you a refund without you needing to do anything.

However, if there are tax preparation errors (typos, inaccurately reported figures, etc.) then you should ask your tax preparer to revise your tax return. Every single reputable tax accountant offers to prepare amended tax returns for free if the accountant made an error on the return. (This is my standard policy.) You are always responsible for paying the amount of tax, for signing the return, and for making sure your return is accurate.

If you paid too much tax, then you really don't have a financial loss, do you? The tax accountant should prepare an amendment, then the IRS will send you a refund check, and you'll be just fine. So you won't be poorer, just a little bit of a hassle.

Hope this helps.

William Perez
About.com Guide to Tax Planning
http://taxes.about.com/

Answer 4

You're talking about two different things: taxes and damages.

The fact that you called it "the US Tax Department" leads me to believe you are not an American citizen or have only recently become one. Everyone calls it the IRS, and many would worry about state income taxes if they are in or earned the money in a state that taxes income (Departments of Revenue, usually called DOR).

The taxes will be recomputed by the IRS and, unless the amount to be refunded to you is very small, it will send you a refund check.

The tax preparer is liable for any lost interest income and the fees charged by the preparer that you might be entitled to have returned to you. If covered by insurance, the insurer will pay you, unless the amount is less that the deductible to be paid by the preparer.

You may want to file an amended 1040, called a 1040X, to claim the correct amount of tax owed and refund due you.

I would not use a preparer that cannot calculate amounts. This is is only arithmetic, not calculus or rocket science.

Answer 5

All you have to do is file a 1040X and the IRS will refund whatever amount you have coming back. Taxes are not simple in any way, shape or form, and errors happen. The form !040X is quite simple; it shows what was originally reported and the corrected amount in the next line. On the reverse the reason for the change is stated. No sweat.

Answer 6

If you are aware of calculational errors, an amended return could be filed to get your overpayment refunded. I would think your preparer would do it for free. Given enough time, usually a few months with calculational errors, the IRS computers will find it and you should receive a notice, or a refund with no action on your part. Since this is October, I am surprised you haven't heard from them already

Answer 7

If you find the mistake within three years you can amend your taxes and the MAN will give you your money back...If it's past three years then you can go after the tax preparer.

Answer 8

You need a CPA qualified Tax Analyst. See if one will grant you a free session. If its not a lot of money (I would define a grand as not a lot when dealing with the government) I would just pay it personally.

Answer 9

Normally the IRS rep who checks the accuracy of your submitted income taxes will find the errors, edit them and write up an explanation of the changes and send you the proper refund along with an the explanation, or they (IRS) will request payment if you end up owing after the corrections have been made.

Answer 10

The IRS will put the money left over toward next years tax and not give you a physical refund. Nor will they pay you interest.
You accountant cost should be reimbursed to you. But since you are getting money back he did do a good job and you may want to keep him.
Heck the IRS doesn't audit anyone who pays too much.