Tax preparers help clients file accurate returns, but mistakes do happen. A name might be misspelled or a number entered incorrectly. In more serious cases, a return might leave out income, a claim deduction, or credit the taxpayer isn’t eligible for. 

The key question is responsibility: If a preparer makes an error, who has to fix it? Who may owe penalties or interest? When can the tax preparer be held liable for mistakes? 

The answer depends on the mistake and the information the taxpayer provided. Whether the preparer acted carefully also factors into the equation. Generally, taxpayers are responsible for the returns they sign. Paid preparers also have professional and legal duties.  

Let’s take a closer look at what liability looks like if a tax preparer makes a mistake. 

Key Points

• Taxpayers are generally responsible for the returns they sign, even when a paid preparer completes them. 
• If a tax preparer makes a mistake, start by confirming the error. Contact the preparer and find out whether you need to file an amended return. 
• Common signs of tax return mistakes include unusually high refunds or IRS notices. Recognizing these signs can save a lot of trouble down the line. 
• Math and clerical errors are common enough that the IRS tracks them. In the 2023 tax year, the IRS issued more than 1 million math error notices for individual income tax returns. 
• It’s possible to report a tax preparer for misconduct, but being proactive is the best way to prevent mistakes. That means reviewing returns carefully and seeking basic tax prep education.  

Common Tax Preparer Mistakes

So, what if a tax preparer makes a mistake? The first step is diagnosing the mistake. 

Here are some of the most common mistakes tax preparers make, according to the Internal Revenue Service (IRS): 

• Filing before a taxpayer receives all their relevant tax documents 
• Using the wrong filing status (e.g., single vs. married filing separately) 
• Incorrectly reporting income or omitting income sources 
• Misspelling a name or leaving off a Social Security number 
• Entering numbers incorrectly 
• Claiming tax credits or deductions that the taxpayer may not be eligible to claim 
• Missing deductions or credits 
• Entering incorrect bank account or routing numbers 
• Submitting a return before the required signatures are complete 

Some of these are clerical errors, but others may involve misinterpretation of tax law. The good news is that most mistakes are minor. A careful review process can reduce many common mistakes, but tax preparers and taxpayers alike also need to know what to do when an error is found. 

How to Spot a Mistake on a Tax Return

Some mistakes show up before a return is filed. For example, income on the return may not match their tax forms or a filing status may seem inconsistent with their household situation. Other errors may not turn up until after filing, often through an IRS or state tax agency notice. 

Common signs of a possible tax return mistake include: 

• A refund or balance due that’s much larger or smaller than expected 
• Income on the return that doesn’t match Forms W-2, 1099, or other tax documents 
• Missing or incorrect personal information, such as a name, address, Social Security number, or filing status 
• Credits or deductions that don’t have clear support from taxpayer records 
• Credits or deductions the taxpayer may qualify for but that weren’t included 
• Differences between the federal return and state return that don’t have a clear explanation 
• A rejected e-filed return, delayed refund, or notice requesting more information 

If an error shows up, the next step depends on whether the return has already been filed.  

Before filing, the preparer can usually correct the return and review the change with the taxpayer. After filing, the taxpayer may need an amended return or help contacting the appropriate tax agency. 

If a Tax Preparer Makes a Mistake, Who Pays?

If a tax preparer makes a mistake, the taxpayer may still need to pay any tax owed. A signed tax return belongs to the taxpayer, even when a paid preparer completes it. That’s why review matters before filing. 

But the preparer may face consequences, too. Paid tax return preparers have legal responsibilities, and the IRS can assess penalties. Here are some of the penalties the IRS may impose: 

• Greater of 75% or $5,000 of the preparer’s income for understatement of the taxpayer’s liability due to willful or reckless conduct 
• Greater of 50% or $1,000 of the preparer’s income for understatement of the taxpayer’s liability due to unreasonable positions (a tax position on a return that doesn’t have enough legal support) 
• $50 per failure for not providing a copy of the tax return to the taxpayer 
• Up to $10,000 on individual tax returns with possible prison time for fraudulent returns or statements 

Penalties are most likely to occur if negligence or misconduct is involved, such as if the tax preparer doesn’t follow tax law. This applies to anyone who gets paid to prepare and file tax returns, regardless of licensing. 

Are Tax Preparers Liable for Mistakes?

A tax preparer can be liable for certain mistakes, but not every error leads to a penalty. What happens depends on what went wrong and whether the preparer acted reasonably. What information the taxpayer provides also plays a role. 

As we touched on earlier, the IRS can penalize paid preparers for issues like understating a taxpayer’s liability or failing to give the taxpayer a copy of their return. And penalties are higher when a mistake involves willful or reckless conduct. 

Ultimately, though, it’s on the taxpayer to pay any additional tax, interest, or IRS penalties tied to their own return. For tax preparers, that makes careful documentation essential. Preparers should keep clear records and avoid credits or deductions without proper support. 

Some preparers also carry errors and omissions (E&O) insurance, which may help cover claims tied to professional mistakes.  

What to Do If Your Tax Preparer Made a Mistake

If you’re a taxpayer whose tax preparer makes a mistake, the first step is to review the return to confirm the error. From there, the focus turns to fixing the mistake. Some can be corrected before filing, and others may require an amended return. 

1. Review the Tax Return Carefully

Compare your filed tax return against source documents. This might include W-2s, 1099s, receipts, or other IRS-issued forms. 

The IRS Interactive Tax Assistant can help answer certain tax questions, such as whether you qualify for a credit or how income may be treated. It’s not a substitute for a full review, but it can help clarify some issues. 

2. Contact the Tax Preparer Immediately

If you find a possible error, contact the preparer who completed the return. Explain the issue clearly and share the supporting documents. 

A responsible preparer should be able to explain (and correct) the mistake and tell you whether an amended return may be needed. For tax preparers, this is where documentation matters. Clear records can show what information the taxpayer provided and how the return was prepared. 

3. File an Amended Return If Necessary

Filing an amended return may be necessary if the original return contained errors or omissions that affect your tax liability. This might include changes to filing status, income, dependents, or eligible tax breaks. Individual taxpayers generally use Form 1040-X to amend a federal income tax return.  

Not every mistake requires an amended return. The IRS may correct certain errors during processing, such as math errors or missing schedules. If the IRS corrects the issue, it will generally send a notice explaining the change. 

4. Respond Promptly to Any IRS Notices

An IRS notice doesn’t always mean something is seriously wrong, but you’ll want to respond quickly to avoid any issues. Common types of notices include: 

• CP521: Installment payment due 
• CP504: Money owed 
• CP134R: Refund amount discrepancy 
• CP44: Return processing delays 
• CP180: Return missing a schedule or form 

The sooner you respond, the sooner you can resolve issues like interest charges or penalties. 

How to Report a Tax Preparer for Misconduct

There’s a difference between an honest mistake and misconduct. Reaching out to the tax preparer before submitting a complaint could help you reach a resolution without complicating matters.  

Misconduct is more serious and may involve fraud or false claims. The IRS uses the following forms for complaints against a tax return preparer or tax preparation business: 

• Form 14157: For general complaints against a tax preparer or tax prep business 
• Form 14157-A: For complaints against a tax preparer who engaged in fraud or misconduct 

Be prepared to provide supporting documentation substantiating your concerns. 

For federal disputes, you’ll typically have 3 years to file a complaint. State and local disputes have their own timelines.  

How to Prevent Tax Filing Errors

Knowing what to do if a tax preparer makes a mistake is useful. Preventing the error in the first place is better. 

Taxpayers can reduce filing issues by reviewing the return before signing and working with a preparer who has the right experience for their tax situation. For aspiring tax preparers, it’s not much different. Careful intake and a consistent review process can help catch mistakes before filing a return. 

Choose a Qualified and Trained Tax Professional

The IRS requires anyone who prepares federal tax returns for pay to have a valid Preparer Tax Identification Number (PTIN). A PTIN alone doesn’t show a preparer’s training or professional credential. The IRS notes that tax return preparers have different levels of skill and expertise. 

Credentialed tax professionals may include: 

• Enrolled agents (EAs): EAs are federally licensed tax specialists with unlimited rights to represent taxpayers before the IRS. They must complete 72 hours of continuing education (CE) every 3 years to maintain their credential. 
• Certified public accountants (CPAs): CPAs are licensed by state boards and often have broader accounting, financial reporting, and tax experience. Some CPAs specialize in tax preparation or tax planning, while others focus on audit or advisory work. Licensing and CE requirements vary by state. 
• Attorneys: Attorneys are licensed by state bar authorities and may specialize in tax law or tax disputes. They can be a strong fit for complex legal tax matters, such as IRS disputes or business tax issues. 

A good place to check a tax preparer’s credentials before hiring them is the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. 

Understand Basic Tax Planning Strategies

You don’t need to become a tax expert to review your own return. By grasping even the basics can help you ask better questions before signing. 

This is also where tax education can help career-curious learners. Introductory tax prep or tax planning courses can show how individual returns are built and where common errors tend to happen.  

For someone considering tax preparation as a career, that foundation can make the work feel more concrete before committing to a longer training path. 

Consider Specialized Training for Complex Returns

Some returns require more experience than others. Business income, self-employment, investments, rental property, foreign income, or multi-state filing can add more tax rules and documentation. 

If your return is more complex, look for a preparer with relevant experience. If you’re learning tax preparation, these areas may also point to the kind of specialized training you’ll need over time. Business tax, self-employment income, capital gains, depreciation, and entity-specific rules may require more advanced training, such as a business tax class. 

Education and Accountability Matter in Tax Preparation

If a tax preparer makes a mistake, what happens next depends on the context. Some mistakes are simple to correct. Others may require an amended return or a formal complaint if misconduct is involved. 

Taxpayers can reduce risk by reviewing returns before signing and choosing a qualified preparer with the right experience. Tax preparers can reduce risk by documenting client information and reviewing returns carefully before filing. 

Tax education can help on both sides. If you hire a preparer, learning the basics can make you more confident when reviewing your return or asking questions. If you’re thinking about becoming a tax preparer, an introductory online tax prep course can help you understand the work and figure out whether the field is a good fit. 

FAQs

How often are errors made on tax returns?

Tax return errors happen often enough that the IRS tracks them by category. Math and clerical errors are among the most common. For calendar year 2023, the IRS reported more than 1 million math error notices for individual income tax returns. 

What are the common errors made by tax preparers, and how serious are they?

Math errors, missing info (like income or an SSN), and incorrect credits and deductions are among the most common. As for how serious they are, it really depends on the mistake and the intent behind it. The IRS may correct certain errors during processing, which resolves some issues. But in other cases, the tax preparer (and the taxpayer) may face penalties or other consequences of filing an incorrect return. 

Is an error made by a tax preparer better than making the error by doing a return yourself?

It depends on the situation. A professional tax preparer may be more likely to catch complex tax issues or identify deductions and credits correctly, especially for more complicated returns. However, taxpayers are still generally responsible for the accuracy of the return they sign. Whether you prepare your own taxes or hire a professional, reviewing the return carefully before filing can help reduce costly mistakes.