Nowadays, more than 90% of individual tax returns are submitted electronically, and the procedure is usually simple. But e-filing can become more complicated when tax returns are rejected after being submitted electronically.

Common causes for rejected tax returns

Simple filing errors. Most denials result from mistakes like misspellings, typos on Social Security numbers, or incomplete applications. The IRS e-filing system returns rejection codes when a tax return is denied after being electronically filed. The problem descriptions for these codes, which are particular to lines on the tax return, are easily accessible. The majority of these mistakes are simple to fix.

Dependent errors. This mistake happens when another person claims a dependant on a previously submitted tax return. For example, this frequently occurs when divorced and unmarried spouses claim the same child on their tax returns. In this case, the IRS accepts the earlier-filed return and rejects any later filings without taking a position.

Identity fraud. Your Social Security number has already been used to submit a tax return by another person.

Most mistakes are straightforward and simple to fix, making it possible to resubmit your tax return for e-filing with little more delay. There are, however, two situations that demand your immediate response. When either of these happens, you might need to physically mail your tax return while working to fix the mistake for subsequent tax filings:

Corrective actions to take

1. Dependent errors. You may only list a dependent on one tax return. Suppose a dependent has already been included on another person’s tax return. In that case, you must show evidence that the dependent should be on your return. If this occurs, contact the person who claimed your dependent status and request that they revise their tax return. Inform them that you are correctly claiming the dependant on your tax return. Both tax returns are the focus of your filing for a potential IRS audit. Often, the threat of an audit is enough to spur action.

2. Identity Fraud. Criminals file tax forms electronically using stolen information to steal your tax withholdings. Refunds with a fraudulent claim are then automatically paid into thieves’ bank accounts. Sadly, if your e-filed tax return is denied, you might learn about the theft then. If it occurs to you:

• File a paper tax return
• Include Form 14039: Identity Theft Affidavit with your tax return
• Confirm your identity using the IRS Identity Verification Service or by calling the IRS
• Mail your tax return using Certified Mail with Return Receipt Requested, so you are sure of timely delivery
• Immediately take steps to protect your financial information. The following link will take you to the Federal Trade Commission’s identity theft area for recommended actions to protect yourself: FTC Identity Theft Assistance

Although figuring out why an e-filed tax return was rejected might be challenging, the sooner the issue is fixed, the faster you’ll get your refund. Contact our RRBB accountants and advisors if you have any questions.