A tax math error is when you followed the correct rules but made a mistake in the math. Here’s what you need to do to fix the problem and reduce any penalties.
What is a tax math error?
A tax math error is like when you got partial credit on a math test in school. The teacher could see that you knew the right formula but didn’t round properly.
There is no partial credit when it comes to taxes. You have to get things right. The good news is that it’s usually an easy problem to correct since the only mistake was in the math.
Here are some examples of math errors:
- Basic calculations — addition, subtraction, multiplication or division
- Selecting something that’s obviously incorrect like multiplying by the tax rate for joint filers when you’re a single filer
- Inconsistent entries — for example, entering the result from line 5 as $59 when line 5 was actually $95
- Not following the limits — for example, entering $2,000 when it says the lesser of 10% or $1,000
- Entering the amount of payments or credits you previously made or received before filing incorrectly — for example, saying you didn’t get the advanced child tax credit when you did
How do tax math errors happen?
If you did your taxes by hand, it’s easy to see how you can make a math mistake. Even if you use a calculator, you might type something wrong or record the result incorrectly.
If you used tax filing software, tax math errors are rare, but they still happen. Computer programmers make mistakes, and with millions of possible situations, they can’t catch them all. It’s usually something like entering the formula wrong in the code.
How do you find out about tax math errors and what should you do?
There are a few different ways to find out about tax math errors. What you should do depends on how you found out.
The IRS notifies you shortly after you file and there are no penalties.
The IRS automatically checks tax returns for basic issues like math errors. In many cases, you’ll get a notice as soon as they process your tax return.
The bad news is this might delay your refund. The good news is that if you file early, get a notice that you owe more, and pay before the original payment deadline, you can avoid penalties.
The IRS will also tell you when your error reduced your refund and give you a bigger refund.
The IRS reviews your tax return later.
The IRS continues to check tax returns even after you file. Some of these are automatic checks that take longer. Other times, your return or a group of returns might get flagged for a specific issue.
Since you’re responsible for filing your taxes correctly, you’ll owe interest and late payment penalties on any additional amount you owe. If you’ve never had a tax problem before or at least not in the recent past, you can request to have the penalties removed.
You caught the error.
If you review your tax return after you file and discover a math error, you should file an amended return as soon as possible.
If you should get a bigger refund, filing an amended return will make sure you get it. There is no guarantee that the IRS will detect your math error and automatically issue a bigger refund.
If you owe more, filing an amended return will reduce your interest and penalties. If you wait for the IRS to catch the error, that’s more time for interest and penalties to accrue.
What if I disagree with the IRS?
Math errors are usually black and white, but there are times the IRS’s math could be wrong. A common situation recently is the IRS telling people they got their stimulus payment when they didn’t.
If you get a math error notice, check the math yourself. If you disagree, respond to the notice explaining why. You can learn more about how to respond to specific notices here.
Is my tax software or accountant responsible for the math error?
Most tax preparers have guarantees covering math errors. The exception is when you didn’t give them information or you signed your tax return when something major (like your W-2 income) was missing.
If you receive a math error notice, contact your tax preparer to see if they’ll help you resolve it.