What to Do if You Discover Past Mistakes When Preparing Your Tax Return in 2025

What should you do if you discover past mistakes when preparing your tax return in 2025? If you are asking this question, you are not alone. Federal tax mistakes are extremely common, and unintentional mistakes are among the main reasons why individual taxpayers face audits from the Internal Revenue Service (IRS). Learn more from Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.

Examples of Common Federal Income Tax Mistakes

Under the Internal Revenue Code (IRC), filing mistakes that result in underpayment of federal income tax can automatically trigger interest and penalties. When applicable, interest and penalties both begin to accrue immediately—which means that taxpayers can face substantial additional liability if they fail to correct a mistake for an entire tax year. Some examples of common federal income tax mistakes that can lead to this additional liability include:

• Failing to report non-employment income (i.e., income from gig work, securities or cryptocurrency investing, gaming, gambling, or retirement account distributions)
• Filing federal income tax returns before receiving all necessary 1099s and other tax forms
• Improperly claiming credits (i.e., incorrectly calculating a credit or claiming a credit for which a taxpayer is ineligible)
• Improperly claiming deductions (i.e., incorrectly calculating the home office deduction or claiming deductions for non-qualifying meals or travel)
• Incorrectly calculating federal income tax liability, transposing numbers, and making other errors that result in underpayment of federal tax liability

All of these are mistakes which, while common, need to be corrected promptly upon discovery. If you fail to promptly correct a tax mistake of which you are aware, this can make your situation much more serious. While inadvertent mistakes can trigger interest and financial penalties, knowingly underpaying the IRS (including knowingly ignoring a past underpayment) can lead to allegations of criminal tax evasion or tax fraud.

How to Address Mistakes on Last Year’s Tax Return (and Avoid Making Additional Mistakes)

So, let’s say you made a mistake on last year’s return. How can (and should) you remedy your mistake in 2025?

The short answer is, “It depends.” In some situations, submitting an amended or delinquent return and paying what you owe (including interest and penalties) might be the only practical solution. However, this can also be risky—as it does not prevent the IRS from opening an audit or pursuing enforcement action. It can also be impossible if you cannot afford to pay the full amount you owe.

When submitting an amended or delinquent return is ill-advised or impossible, then the options you have available depend on the specific circumstances at hand. While submitting an offer in compromise, seeking an installment agreement, and filing a voluntary disclosure could all potentially be on the table, each of these options presents its own risks and challenges. Informed decision-making is critical, and to ensure that you protect yourself going forward, you will want to discuss your options with an experienced Washington D.C. tax lawyer as soon as possible.

Request a Confidential Consultation with Washington D.C. Tax Lawyer Kevin E. Thorn

Do you need to know more about how to correct a mistake on last year’s tax return? If so, we encourage you to contact us promptly. To request a confidential consultation with Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 202-349-4033 or request an appointment online today.