4 common mistakes that trigger IRS notices

No one has to commit tax fraud to get the IRS’s attention. Sometimes, minor errors can trigger a notice and result in additional costs for your client.

Mistake 1: Typos and mismatched data

It seems basic, but incorrect names, Social Security numbers or bank account details are among the IRS’s most common flagged issues. Their systems match returns automatically to Forms W-2s, 1099s and other third-party forms. If the numbers don’t line up, the IRS will send out a notice, possibly with interest and penalties attached.

Quick tip: Double-check all personal information before filing. The IRS says this is one of taxpayers' top mistakes each year.

Mistake 2: Missing or misreported income

The IRS receives copies of all Forms W-2s, 1099s and other informational documents. Forgetting to include even a small Form 1099 for side work or bank interest can trigger a notice. Taxpayers sometimes file too early, before all their forms arrive, which can result in omissions that might require an amendment.
It’s also easy to misreport income if clients try to calculate the total themselves from multiple statements, especially for brokerage accounts. If a client is self-employed, there’s an added layer of risk as they receive several 1099-NECs from different payers. Because the IRS uses automated matching, even minor discrepancies between reported income and records can result in a notice and a proposed balance due.

Quick tip: Tell your clients to wait until they receive all expected forms and cross-check amounts against prior year returns to ensure nothing is missing. 

Mistake 3: Incorrect bank info for direct deposit

When entered properly, direct deposit is the fastest way for clients to receive their refund. Entering the wrong routing or account number can delay a refund for weeks or even send it to the wrong place entirely. If the numbers match an existing account, the IRS considers the refund paid and retrieving those funds can require navigating the bank’s rules or even legal action. If the account number doesn’t match any account, the IRS will issue a paper check instead, which can take significantly longer.

Another problem is using temporary or closed accounts. Some clients provide details for a prepaid debit card or seasonal bank product that closes before the IRS processes their return. In these cases, the refund can bounce back, leading to long delays and frustration. Something as simple as transposing two digits or accidentally using an old bank account can cause a mess.

Quick tip: Always have clients double-check routing and account numbers against a current bank statement or check.

Mistake 4: Bad addresses and missed notices

If the IRS can’t reach a taxpayer, there could be missed deadlines, escalating a simple fix into a bigger problem. Notices contain critical information on payment due dates or documentation requests. Missing them can mean losing the right to appeal, being assessed additional penalties or having enforcement actions, like liens or levies.
A wrong address can happen more easily than clients think. People forget to update the IRS after a move, rely on expired United States Postal Service (USPS) mail forwarding or assume updating their address with their tax preparer is enough. The IRS will send mail to the last address on file, even if the taxpayer has moved multiple times since.

Quick tip: File Form 8822, Change of Address, to update address information with the IRS after a move.