How to Validate That You Correctly Filed Your Tax Return in the United States?

Tax compliance is a critical responsibility for any business in the United States. However, a surprising number of businesses do not file their tax returns correctly, which can lead to significant fines and legal issues.

According to recent data from the Internal Revenue Service (IRS), more than 20% of businesses in the United States make errors in filing their tax returns, amounting to over $30 billion in misreported taxes. These errors not only result in costly fines but also jeopardize the reputation and financial stability of a company.

In this blog, we will explore how business owners can know if they have filed their tax returns correctly, the most common mistakes made when filing, the potential penalties, and how Prodezk can help ensure your business meets all its tax obligations.

Common Mistakes When Filing a Tax Return

Filing a tax return correctly is essential to avoid fines and legal issues. However, many businesses make common mistakes that can have serious consequences. Below, we detail some of the most frequent mistakes:

1. Omission of Income
   One of the most common mistakes is omitting income in the tax return. This can happen when a business does not report all its sources of income, either due to an unintentional error or lack of knowledge about what income must be declared. The IRS can detect these omitted incomes through audits and data comparisons obtained from financial entities, which can lead to significant fines.
2. Calculation Errors
   Mathematical errors, although they seem simple, can cause major problems. A small error in the calculation can alter the total amount of taxes owed or the expected refund amount, which could trigger a review by the IRS.
3. Incorrect Deductions
   Claiming deductions to which you are not entitled or failing to claim deductions that are available are other common mistakes. Incorrect deductions can result in fines and adjustments by the IRS, as well as reducing the value of the legitimate deductions the business could have claimed.
4. Incorrect or Incomplete Information
   Providing incorrect information, such as incorrect identification numbers, outdated addresses, or incorrect bank details, can cause the return to be rejected or delay its processing.
5. Not Filing the Return on Time
   Being late in filing the tax return is a mistake that can result in penalties for late filing. The IRS imposes significant penalties for each month of delay, which can accumulate quickly if not addressed in time.

Penalties for Mistakes in Tax Returns

The IRS not only detects errors but also imposes fines and penalties on businesses that do not fully, correctly, and timely comply with their tax obligations. Some of the most common penalties include:

• Penalty for Omission of Income: If the IRS determines that a business did not report significant income, it can impose a fine of 20% on the unreported amount.
• Penalty for Calculation Errors: Severe calculation errors can lead to additional penalties, especially if negligence is deemed to have occurred.
• Penalty for Incorrect Deductions: Claiming unauthorized deductions can result in a 20% penalty on the amount incorrectly deducted.
• Late Filing Penalty: This penalty is generally 5% of the unpaid tax for each month or part of a month that the return is late, up to a maximum of 25%.

How Can We Help You Avoid Tax Errors?

At Prodezk, we understand the complexity of tax compliance and how important it is for your business to file accurate and complete tax returns. We offer two key services to help you ensure that your tax returns are filed correctly and avoid any issues with the IRS:

Tax Records and Transcripts

Tax Records and Transcripts are documents provided by the IRS that contain detailed information about your tax history. These documents include:

1. Copies of filed tax returns
2. Payments made
3. Adjustments and corrections made by the IRS
4. Official communication with the IRS

What Are Tax Records and Transcripts Used For?

These records are essential to:

• Know the information the IRS has on your business
• Compare IRS records with yours to detect discrepancies
• Verify your tax situation before closing deals or applying for loans
• Have access to copies of previously filed returns
• Ensure you don’t have outstanding balances with the IRS
• Resolve tax disputes with accurate evidence

How to Request Your Tax Records and Transcripts with Prodezk?

1. We manage the request for the necessary transcripts from the IRS.
2. We help you accurately complete all the required forms.
3. We ensure you receive all the required documents quickly and without complications.

In addition to tax records, we offer personalized accounting plans to ensure that all your financial operations are properly documented and reported to the IRS. Our accounting services include:

• Comprehensive Accounting Management: We ensure that all your income, expenses, and deductions are recorded correctly.
• Tax Return Preparation and Filing: We handle the preparation and filing of your tax returns according to IRS regulations, ensuring full tax compliance for your company.
• Tax Advisory: We provide advice on how to optimize your tax burden and avoid common mistakes.

Filing tax returns correctly is crucial for the success and financial stability of your business in the United States. With over 20% of businesses making errors in their returns and $30 billion in misreported taxes, it is essential to ensure that your company is not part of these statistics.

At Prodezk, we help you avoid these mistakes and ensure that your business meets all its tax obligations. If you have any questions, contact us and receive a free consultation with our expert accountants.