Filing your taxes is a headache enough, but that’s before that moment when you think there’s an error in the way you’ve been taxed. Do you really have to pay that unexpected tax bill? Did you overlook or forget something that means you’re being taxed more than you should? And who do you ask for help?
You’re having a tax dispute if you think there’s an error in the amount you owe, or in the information reported by the tax authorities. And a lot of people seem to have tax disputes! They can happen for a whole long list of reasons, which could be incorrect income reporting, or discrepancies in deductions. In some cases – although a little more rare – it can even be clerical errors by the tax office.
Whatever the reason, it can feel like you’re up against a huge faceless machine if you want to dispute your taxes. So what do you do?
Find the Reason
There are several reasons why you might find yourself needing to dispute your taxes – so try to pinpoint it as best you can before you get advice. Knowing which area of tax is the possible problem will help you find advice from the right expert. One of the most common issues is incorrect reporting of income. This could happen if your employer made an error on your W-2 form, or if you are self-employed and there’s a discrepancy in the 1099 forms submitted by your clients.
Denial of deductions is another common one. If you think you qualify for certain deductions or credits that were disallowed, it could be worth challenging the decision. For example, deductions related to education expenses, medical bills, or charitable contributions.
Preparing to Dispute Your Taxes
Before you jump into disputing your taxes, you need to pull together everything that relates to the issue. First off, gather all the pertinent documentation. This includes income statements, receipts for deductions and credits, correspondence from the tax authorities, and any other relevant paperwork. Organize it in a file – it’ll make it easier to present your case effectively (and your future self will thank you for your logical storage system).
Also familiarize yourself with your rights as a taxpayer. You absolutely do have the right to question the amounts on your tax bill and to receive a comprehensive explanation from the tax authorities. The IRS, for example, has a Taxpayer Advocate Service that can assist you if you’re facing challenges in resolving your issue.
Understanding the steps involved in disputing your taxes is also essential. This includes knowing which forms to fill out, where to submit them, and the deadlines for filing a dispute. Being informed about the process will help you avoid unnecessary delays and increase your chances of a favorable outcome. It can be really beneficial to work with a specialist tax lawyer, such as this tax lawyer in Vancouver, to make sure you present the best possible case.
Disputing an Error
Disputing your taxes can be done in several ways, depending on the nature of the dispute and the jurisdiction.
One of the simplest ways to dispute your taxes is by requesting a correction directly from the tax authorities. This is fine for straightforward errors, such as typos or miscalculations. To do this, just gather evidence supporting your claim and submit a formal request to the relevant tax office.
When requesting a correction, provide clear and concise information about the error in question. Include copies of any supporting documents, such as income statements or receipts, that back up your claim. A well-prepared submission will increase the likelihood of a swift resolution.
Response times will vary depending on the complexity of the issue and the workload of the tax office. Find out what the current processing times are, and follow up if you haven’t heard back within that timeframe.
Filing an Amended Tax Return
If the error in your tax assessment stems from incorrect information on your original tax return, you may need to file an amended return. This involves filling out a specific form — such as the 1040X for the IRS — and providing the correct information along with an explanation of the changes.
Filing an amended tax return can be a bit more involved than a simple correction request, but it allows you to address multiple errors at once. This method is ideal if you’ve discovered several discrepancies in your original filing, such as unreported income or additional deductions. You may well want to get help from a tax lawyer for something like this.
It’s important to note that there are deadlines for filing an amended return. For federal taxes, you typically have three years from the date you filed your original return, or two years from the date you paid the tax, whichever is later.
Appealing a Tax Decision
In cases where the tax authorities have made a decision that you disagree with, such as denying a deduction or credit, you may have the option to appeal. This means you’ll present your case to an appeals officer, who will review the information and make a determination.
The appeals process can be more formal and lengthy than other dispute methods. But it does mean you have an opportunity to have your case reviewed by a neutral party. Gather all relevant documentation and prepare a clear argument to support your position.
Appeals procedures can vary depending on the jurisdiction, so it’s essential to familiarize yourself with the specific requirements and deadlines for your situation. In some cases, you may benefit from seeking professional advice or representation from a tax attorney or accountant.
Disputing your taxes might seem like you’ll get lost in a whole world of bureaucracy, but it’s your right to do it. Arm yourself with evidence and knowledge, get help from a tax lawyer, and get to the bottom of the issue. It’s the right thing to do.