Tax season is coming up, and you may be due a refund. In the simplest of scenarios, this is handled in the course of filing your annual tax return, but in some cases, there may be an error that means you still paid more than you technically owed. Businesses and those with more complex financial profiles may find themselves overpaying due to certain oversights or situations.
Errors in taxes are common, and the IRS generally does a decent job of double-checking your returns and refunding overpayments. If you made math errors on your return or when calculating certain taxes, or if you forgot to take certain obvious exemptions, you will usually be refunded the amount overpaid with no effort on your part.
However, the IRS will still miss certain items. Whenever this happens, it’s important to carefully examine tax and financial documents to verify the amount you owed and determine whether you overpaid. Common causes of overpayment include:
- Failure to claim certain deductions, such as from charitable donations or mortgage interest
- Failure to claim certain tax credits, especially if they involve lengthy calculations or extra documentation
- Overpayment of estimated taxes
- Excess tax paid due to an audit
Since the IRS is less likely to spot these errors, it will be on you to claim a refund for overpayment. There are a couple of ways to do this, the simplest of which is filing an amended return.
Filing an Amended Return
The simplest way to claim a refund is by filing an amended tax return using Form 1040X. This is essentially a corrected 1040 form, and it’s used to fix errors with income credits, deductions, filing status, etc. An amended return must be filed within three years of the tax year in question, though any claims of an overpayment must be made within two years of the amounts paid to the IRS, so it’s best to file earlier rather than later.
The form requires an explanation of why you need to make changes to your return. It’s important to be precise here—vagueness may result in a dispute.
Form 843, Claim for Refund and Request for Abatement
Some scenarios are more complex. For instance, if the IRS is levying additional tax amounts or penalties against you, you may have to claim abatement of those penalties. Certain overpayment situations may not be resolvable through an amended return, which is where one would use Form 843, Claim for Refund and Request for Abatement.
This form is best used with the guidance of an attorney, and you will need to be specific about the reasons why you need a refund or abatement. Otherwise, it is unlikely to succeed.
Denial and Appeals
In some cases, the IRS may deny your claim, in which case you’ll have a right to appeal. If this occurs, the first thing you should do is contact an experienced tax lawyer. Hart David Carson LLP can provide the legal guidance you need when dealing with tax overpayments and IRS appeals.