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Depending on how you file, the IRS will usually notify you of a rejected tax return via email or standard mail. In the rejection notice, you will find a rejection code and an explanation of why the rejection occurred.

However, you should always be wary of scammers that try to steal your information posing as the IRS. The IRS will typically not call you about a rejection unless they have repeatedly tried contacting you by other means first.

Thankfully, when the IRS rejects your tax return, it’s usually nothing to be overly concerned about. Let’s take a look at a few reasons why your tax return was rejected and how you can start the process over.

Why Was My Tax Return Rejected?

The IRS will reject a tax return for a variety of reasons, including the following:

The Return Was Already Accepted

The IRS will reject your tax return if they previously accepted a return with your Social Security number (SSN) or taxpayer identification number (TIN). If this occurs, if could be a sign of identity theft or fraud.

Missing Or Incorrect Information

The IRS can also reject your return if a name or number fails to match what they have on file for you. For instance, if you changed your name after marriage or need to update your name with the Social Security office, the IRS needs to know about this. A simple issue like a typo when e-filing your return could end up in a rejection.

Your Signature Does Not Match

When you e-file, the IRS will ask you to provide your adjusted gross income (AGI) from the previous tax year or an Identity Protection PIN to ultimately verify your identity. If the numbers you provide do not match the IRS’ records, your return will likely be rejected.

You Claimed A Dependent Claim On Another Return

If you try to claim a dependent, such as a child, already claimed on another tax return, the return will be rejected. An example of this could be a divorced parent trying to claim their child when their ex-spouse has already claimed the child on their return. The same thing can happen if a dependent files their own return and claims themselves.

What To Do If A Tax Return Is Rejected

If your return has been rejected, you will need to correct any errors and resubmit the return as soon as you can. You may be able to e-file the return for small mistakes like a typo, or the IRS could instruct you to mail in a paper return for more serious errors.

Once you know exactly what caused the return to be rejected, you are required to correct the mistake and resubmit the original return.

Correcting An E-File Rejection

Whenever an e-filed return is rejected, the IRS generally sends a rejection code that includes an explanation of why it was ultimately rejected. This will usually happen within a few hours of submitting the return.

You may be able to resubmit through e-file or filing a paper return depending on the reason why the return was not accepted. If, for example, you made a mistake in entering the EIN or SSN or other errors, you can make corrections and e-file the return once again. Ensure that you submit before the filing deadline or within five days of getting the rejection notice if this occurs after the deadline passed.

Refiling By Paper Return

When the return is rejected because of possible identity theft or tax fraud, the IRS requires individuals to resubmit the return by mail. You also need to refile by mail if your dependent was claimed on another individual’s tax return.

You will need to include all required tax forms, W-2s and/or 1099s, as well as any additional supporting documentation. The IRS Form 14039, Identity Theft Affidavit should also be included.

Once the IRS has received your return and Form 14039, you will get an acknowledgement letter. The IRS will then investigate the returns in questioned and make a decision on which one is valid. Sometimes, this entire process can take up to six months to complete.

How Long Do I Have To File A Corrected Return?

You will need to correct any mistakes prior to the year’s tax deadline. If the IRS rejects your return on or after Tax Day, you will have five days to correct and resubmit the return.

Some states will have different grace periods for rejected returns, so always check to see how much time you have to resubmit your return.

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Thankfully, when the IRS rejects your tax return, it’s usually nothing to be overly concerned about. Let’s take a look at a few reasons why your tax return was rejected and what you can do moving forward.

What Is An IRS Rejected Tax Return?

If you receive a notice from the IRS that your federal income tax return was rejected, it means they noticed and error. The IRS is sending the return back to you for correction.

Why Did The IRS Reject My Tax Return?

The IRS will reject a tax return for a variety of reasons, including the following:

The Return Was Already Accepted

The IRS will reject your tax return if they previously accepted a return with your Social Security number (SSN) or taxpayer identification number (TIN). If this occurs, if could be a sign of identity theft or fraud.

Missing Or Incorrect Information

The IRS can also reject your return if a name or number fails to match what they have on file for you. For instance, if you changed your name after marriage or need to update your name with the Social Security office, the IRS needs to know about this. A simple issue like a typo when e-filing your return could end up in a rejection.

Your Signature Does Not Match

When you e-file, the IRS will ask you to provide your adjusted gross income (AGI) from the previous tax year or an Identity Protection PIN to ultimately verify your identity. If the numbers you provide do not match the IRS’ records, your return will likely be rejected.

You Claimed A Dependent Claim On Another Return

If you try to claim a dependent, such as a child, already claimed on another tax return, the return will be rejected. An example of this could be a divorced parent trying to claim their child when their ex-spouse has already claimed the child on their return. The same thing can happen if a dependent files their own return and claims themselves.

How Will I Be Notified If My Return Has Been Rejected?

Depending on how you file, the IRS will usually notify you of a rejected tax return via email or standard mail. In the rejection notice, you will find a rejection code and an explanation of why the rejection occurred.

However, you should always be wary of scammers that try to steal your information posing as the IRS. The IRS will typically not call you about a rejection unless they have repeatedly tried contacting you by other means first.

What To Do If A Tax Return Is Rejected

If your return has been rejected, you will need to correct any errors and resubmit the return as soon as you can. You may be able to e-file the return for small mistakes like a typo, or the IRS could instruct you to mail in a paper return for more serious errors.

How To Fix A Rejected IRS Tax Return

Once you know exactly what caused the return to be rejected, you are required to correct the mistake and resubmit the original return.

How Long Do I Have To File A Corrected Return?

You will need to correct any mistakes prior to the year’s tax deadline. If the IRS rejects your return on or after Tax Day, you will have five days to correct and resubmit the return.

Some states will have different grace periods for rejected returns, so always check to see how much time you have to resubmit your return.

What To Do If A Return Was Rejected Due To Identity Theft

It’s recommended to act as soon as possible if you believe you are a victim of identity theft. Respond promptly to any IRS correspondence by calling them with the number provided. You should also print and mail in Form 14039 with your submitted return.

Tax Settlement in Mesa, Arizona

If you need IRS Debt Help, Tax Debt Settlements or Tax Debt Advising in Phoenix, Mesa or anywhere else, Tax Debt Advisors can help! Give us a call at 480-926-9300 or fill out our contact form for a free consultation.

A CD account is a savings instrument issued and administered by banks, brokers, and credit unions. It is widely considered one of the safest investments you can make. A CD will pay a little more interest in return for committing to keep your money in the bank for a specific amount of time. Use this step-by-step guide to open a CD account.

How To Open A CD Account

These accounts are much safer than stocks, but they will not offer high returns. CDs are insured by the FDIC if they are ultimately issued by an FDIC-insured bank.

Typically, CD’s do not allow individuals to add to their balance. Once you make the initial deposit, the balance will be locked in to keep earning interest until the maturity date. This is part of the reason that CDs do usually offer higher interest rates than other deposit account types.

When you invest in a CD, you commit to locking your money away for a specified period of time. You cannot add to the balance and there will often be steep penalties to pay when choosing to withdraw your money early. You will get a greater return on your deposit in exchange for less liquidity.

Follow the steps below to open your account.

Step 1. Choose The Right CD Account

A good first move is to compare CD interest rates across several banks and credit unions before opening an account. It’s important to also keep the following factors in mind:

• CD terms can range all the way from three months to five years.
• CD types can vary, but regular CDs are undoubtedly the most common. Add-on CDs will differ from traditional CDs since they allow the depositor to contribute more funds to the account during its term.
• You can open single or joint accounts. Check with your local bank for more information on what they provide.
• With a CD laddering strategy, you can purchase multiple CDs, each featuring a different term.

Step 2. Apply

Depending on the bank, it may be possible to open the CD account online. Of course, you can always open this account in-person at the branch or over the phone. If you do so online, the application process will typically take 5-20 minutes to complete.

If you miss any required information or are not yet an existing customer, you may need help completing this step.

Step 3. Have The Proper Documentation Ready

When opening a CD, you will be expected to provide one to two forms of ID, plus your residential address. Other contact information like a phone number and email address should be provided at this time.

Step 4. Choose How You Want The Interest Disbursed

Most financial institutions will offer you two options: Receive all the interest following the end of the CD term or disburse the interest as regular payments. Collecting all the interest at the end of the term is more common. However, you can set this up as regular payments, such as monthly or annually.

Step 5. Make Your Deposit

Unlike with a savings account, you typically aren’t able to add money to the CD more than one time. You’ll put down a set amount and leave it untouched until the term of CD has concluded. You can link this account to another bank and transfer the money by mailing or depositing a check when opening the account.

Tax Settlement in Mesa, Arizona

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Let’s take a look at the differences between a Certificate of Deposit (CD) and an Individual Retirement Account (IRA).

Individual Retirement Account (IRA) Vs. Certificate Of Deposit (CD)

An IRA and a CD are two savings account types that can be obtained at financial institutions, such as banks. While both accounts are designed to help individuals save money, they are inherently different overall. A CD is considered a short-term savings account, while an IRA is best for long-term retirement investing.

IRAs have tax advantages to the saver and restrictions on how it can be used before retirement age is reached. The account holder can contribute to this account every year, up to the limits set by the IRS. Essentially, a CD is equivalent to a savings account. The account holder will get a little more interest in return for keeping the money in this account for a set amount of time, typically from six months to five years.

Anyone with an IRA account can choose to invest the money in any of a large variety of stocks, mutual funds, bonds, and exchange-traded funds (ETFs). Account holders can even choose to invest some of it in CDs.

CD Details

A CD is a savings instrument issued and administered by banks, brokers, and credit unions. It is widely considered one of the safest investments you can make. A CD will pay a little more interest in return for committing to keep your money in the bank for a specific amount of time.

These accounts are much safer than stocks, but they will not offer high returns. CDs are insured by the FDIC if they are ultimately issued by an FDIC-insured bank.

Typically, CD’s do not allow individuals to add to their balance. Once you make the initial deposit, the balance will be locked in to keep earning interest until the maturity date. This is part of the reason that CDs do usually offer higher interest rates than other deposit account types.

When you invest in a CD, you commit to locking your money away for a specified period of time. You cannot add to the balance and there will often be steep penalties to pay when choosing to withdraw your money early. You will get a greater return on your deposit in exchange for less liquidity.

IRA Details

The IRA was developed by the federal government to encourage Americans to save money towards their retirement. The account holder can make annual contributions for decades as the balance increases. The IRS does set eligibility requirements, limits on how and when you are allowed to make contributions.

You should consider opening a traditional or Roth IRA alongside your 401(k). A Roth IRA is funded with your after-tax dollars, while the traditional version is funded via pre-tax income. Both of these IRAs allow you to withdraw money without penalty after the age of 59.

If you have any extra money left in your budget at the end of the month, funding IRAs can put you on a fast track to a comfortable retirement. The more time your funds have to grow, the larger they will be come time for retirement.

CD Vs IRA Differences

Let’s take a look at the main differences between these two savings accounts to determine which type is best for your situation.

Account Types

Investors will have many different CD and IRA options to choose from. There are typically four different IRAs that one can invest in, including the following:

• Traditional IRA: This allows investors to make tax-deductible contributions.
• Roth IRA: These accounts give investors tax-free income.
• SEP IRA: Employers can make contributions to a traditional IRA for employees.
• SIMPLE IRA: Small business employers and employees will have the opportunity to make matching contributions as long as they have no other active retirement savings plan.

Here are a few things you can do with a CD:

• Add-On CD: Add-on CDs will differ from traditional CDs since they allow the depositor to contribute more funds to the account during its term.
• CD Laddering Strategy: With a CD laddering strategy, you will purchase multiple CDs, each featuring a different term.

Financial Liquidity

Every financial vehicle will have its own set of objectives and goals. Each type of financial instrument is designed for a specific purpose and therefore comes with its own constraints. Usually, CDs cannot be withdrawn once the account is created. Account holders must wait until the CD term is finished before they get access to their money.

IRAs have an entirely different set up. IRA contributors are allowed to withdraw Roth IRA contributions at any time. However, any earnings cannot be withdrawn until the saver is over 59 years old.

Tax Implications

A big difference between the accounts is how they are treated for tax purposes. IRAs provide a few certain tax breaks to investors. Contributions made to a traditional IRA are tax-deductible, as long as you meet the income and tax-filing status requirements.

CDs, however, do not come with any tax breaks. Your financial institution will send you a Form 1099-INT for any interest earned on your investment. The IRS requires that you report any interest income that comes in over $10.

Conclusion

It’s no secret that an IRA is a better financial vehicle for retirement savings. It will allow savers to have their earnings grow tax-free when utilizing a Roth IRA. If you are not saving for retirement, then a CD is a terrific and safe option.

Tax Settlement in Mesa, Arizona

If you need IRS Debt Help, Tax Debt Settlements or Tax Debt Advising in Phoenix, Mesa or anywhere else, Tax Debt Advisors can help! Give us a call at 480-926-9300 or fill out our contact form for a free consultation.