How to Avoid E-file Rejections

First, let’s start with the good news: congratulation on being one of the 90% of taxpayers that electronically file their tax returns. It is the most accurate and fastest way of filing taxes. 

The bad news, or rather the so-so news, is that sometimes your e-filings do get rejected. However, even if that is the case, the rejection code will provide you with information about what is wrong and how to fix it. But, of course, to e-file again, you have to correct your mistake in the filing first.

Many of the e-file rejections can be easily fixed. However, sometimes taxpayers get frustrated and feel as if they came across the Great Wall of China, but they don’t even take the time to read the rejection note. Indeed, the rejection code is not exactly in plain English. It sometimes is writtenasonelongline. 

You can receive a rejection code that says “SpouseNameControlTxt” or “ExemptSpouseNameControlTxt” which is not exactly user-friendly. There is usually a short explanation of what it means. If you still can’t figure it out, you can either reach out to your tax software support or Google it. 

Check the eFiile.com website for a list of many 2020-2021 e-file rejection codes. The most frequent e-file rejection errors are due to the following:

• Incorrect personal information such as names, SSNs, birth dates;
• Inexact employer name or Employee Identification Number (EIN) on Form W-2 or Form 1099; and 
• Mistaken self-selected PIN or prior year AGI used during the e-filing verification process.

The main reason tax returns get rejected is that the IRS information on file doesn’t match what you entered into the tax return. Most tax software will let you know immediately or within few hours whether there was an e-file rejection.

The most important thing to remember about e-file rejections is that you should re-submit it ONLY after fixing the error. Otherwise, if you keep re-submitting and getting a rejection, at some point, the IRS will block your tax return from being electronically filed even if you fix the error. The IRS sees this activity as suspicious at this point, and the only option you will have is to file your tax return via paper. 

Most rejections are quick and easy fixes, but some may take time to obtain necessary documents. Therefore make sure you plan accordingly and watch out for the due date.

If you file on the last day when tax returns are due, and your tax return gets rejected, you have a grace period of 5 days to re-file. If you re-file within that period, your tax return will be considered to be filed on time.

Key Takeaways: How to Avoid E-File Rejections

• Double-check all the SSNs, DOBs, EINs on your tax returns. If you are using an IP PIN or prior year AGI for verification purposes, double-check it.

• Double-check the amount of withholdings on your Form W-2 for the federal and state.

• If your dependent has been incorrectly claimed on another return, you can file via paper with supporting paperwork so that the IRS compares the two claims.

• If you suspect that someone has compromised your identity, contact Taxpayer Protection Program at 1-800-908-4490. If you purchased identity protection from a tax software or tax retail company, call their number first.

• When claiming CTC, double-check the DOB for all your children that the month and day are not transposed.

• If an EITC / AOTC / CTC / ACTC / ODC credit was disallowed in the past, you might have to include Form 8862 with your tax return.

• If this is your first time filing tax returns, you may have to file via paper.

• If you forgot to attach a form to your tax return, read the instructions on how to resubmit your filings.

• Double-check whether you still have to repay any First Homebuyer Credit by checking your account on the IRS website. 357

• If you are filing after the due date, the direct debit date can’t be later than date of filing. 

The above is a summary of the more in-depth discussion in the Boost Your Tax IQ book. This is a bite-size checklist of the main points covered to help you feel confident about filing for the tax year 2021.

Who says your taxes can’t be simplified?  ٩(ˊᗜˋ*)و