Thousands of taxpayers wonder each year what would happen if they filed their taxes twice. The answer to this question in most cases is not very much. This is because the Internal Revenue Service uses Social Security numbers to identify taxpayers, and the agency will only process one return per SSN.
When the IRS receives two tax returns with the same SSN, they reject the second return and send it back to the taxpayer with a notification letter bearing the error code 0515. Tax returns can be filed twice for many reasons. The taxpayer may have simply made a mistake or they could want to change an error they made on their original return. They could also be the victim of identity theft.
It Might be Identity Theft
If you receive a notification letter with the error code 0515, the first thing you should do is check to make sure that you or your tax preparer did not make a mistake. If no error was made, you should contact the IRS as soon as possible to let the agency know that somebody else used your SSN. You will then be asked to complete Form 14039 and submit it along with proof of your identity. The case will then be passed to the IRS Identity Protection Specialized Unit, and you will be issued with an IP PIN to protect you from further fraud.
What to Know About Filing Errors
People who submit two tax returns to the IRS instead of one sometimes worry that they will end up paying their taxes twice. This fear is unfounded because the IRS will only process one tax return per SSN.
While you may not have to pay your taxes twice, there are situations where filing errors could lead to you paying taxes on the same money twice. This most often happens when taxpayers do not use all of their available deductions or fail to submit the necessary paperwork when they reinvest stock dividends or deposit after-tax money into retirement accounts.
Avoid Paying Taxes Twice on Reinvested Dividends
Many stockholders choose to reinvest their dividends, and they often organize their investment accounts to do this automatically. However, dividends are usually taxable in the year they are paid even when they are reinvested, which could lead to taxes being paid again on this money when the stock is sold.
To prevent this from happening, investors should make sure that they or their tax preparers adjust their tax basis to add reinvested dividends to the original cost of the stock. When an asset is sold, the IRS uses the tax basis to determine the gain or loss.
Avoid Paying Taxes Twice on Retirement Funds
Not adjusting the tax basis of retirement funds can lead to tax being paid twice on money from IRA accounts. This can happen when after-tax amounts are deposited into an IRA, distributions are made that include after-tax dollars or 401(k) accounts that contain after-tax money are rolled over into IRAs.
It is up to the taxpayer to keep track of their IRA account tax basis, and they can do this by attaching a Form 8606 to their tax return. This is the form the IRS uses adjust the tax basis of an IRA to reflect after-tax deposits and withdrawals.
Amending Your Income Tax Return
You may wonder what you should do if you find out you submitted a tax return that contained an error. If you notice the mistake before the filing deadline, you can correct the problem by filing a superseding return.
A paper 1040 must be sent, as e-filing is not permitted in these situations, and “superseding return” should be written clearly at the top. If you discover the error after the filing deadline has passed or find out that you made a mistake on a return you submitted during the last three years, you can amend your information by submitting a Form 1040X.
Tax Tips for Filing an Amended Tax Return
You should file an amended return if you forgot to claim tax credits or deductions or made a mistake about your filing status, number of dependents or income, but you do not have to amend your information to correct basic math errors as the IRS will check your arithmetic. A separate Form 1040X should be submitted for each amended return along with any forms or schedules that have to be changed.
If you are expecting a refund, do not submit a Form 1040X until you have received the money. If you discover that you did not pay enough tax, make up the difference as quickly as possible to minimize or avoid interest and penalties.
Avoid Filing Errors
If you do not want to find yourself wondering what happens if you file your taxes twice, you should consider asking a tax professional to prepare and check your return. Superseding or amended tax returns are usually submitted because taxpayers made basic mistakes or failed to attach forms the IRS needs, which are errors that experienced preparers should be able to catch.
Tax Crisis Institute has been helping individuals and businesses in Bakersfield, Orange County, Las Vegas and Los Aneles avoid tax paperwork problems for more than 30 years, and our experts are dedicated to making sure that you never pay more than you have to. To set up an appointment, please call us at one of our four locations or use our online contact form.