Having a small business can, for some people, actually be beneficial in terms of taxes. The amounts and types of deductions you can qualify for can, especially for a business in its early days that isn’t making much money yet, put you in a position where you owe very little in taxes.
And, while you work hard to make sure that all of your financial information is in order and that you’ve properly filled out your tax return forms, sometimes errors happen. When they do, the IRS will reject your tax return. You’ll be responsible for amending and resubmitting it.
Keep in mind that the vast majority of E-filed returns are rejected due to simple math errors or typing errors. Let’s take a look at some of the common reasons small business tax returns get rejected:
As you can see, the vast majority of reasons that a tax return gets rejected have nothing to do with a mathematical error, and they don’t indicate that the IRS has somehow flagged your return or that you might be facing an audit. In most cases, it’s simply a matter of a clerical error.
How you go about fixing a rejected return depends on the particular error, and how you filed. If your return has been rejected, you can amend your form from the IRS’s e-file website. Generally speaking, your tax professional can handle this process for you and will normally do so. You are allowed to continue to e-file your tax returns as many times as it takes until the IRS accepts your return.
If you find out you’ve made a mistake but the IRS has accepted your return, you have to wait to make your changes. You can’t correct it electronically. Instead, you’ll have to fill out an amended tax return and submit it along with any new information (such as any changed schedules or forms) to the IRS.
You can file that amended tax return as many as three years after when you originally filed the return, so you have some time to fix the problem.
If your tax return is rejected by the IRS after the tax filing deadline, you have a grace period. You have another 5 business days to efile your corrected tax return. If you’re going to instead print it and mail it to the IRS, you have an additional 10 days.