What happens if you make a mistake when filing your tax return?
Regardless of whether it was an innocent error or a purposeful act of omission, your signature on a completed form attests to its accuracy. While sometimes the tax code has broad interpretations, filings need to be accurate.
(Disclosure: I am a Certified Financial Planner and not a tax advisor. See a qualified accountant/tax lawyer for your tax questions.)
What should you do if the IRS finds a mistake?
The penalties for owing tax to the IRS can be quite severe, ranging from fines to jail time, depending on the problem. If the IRS catches you in a deliberate lie, you are in a very sticky situation.
What should you do if you’ve made a mistake on your tax return?
Go for the stalemate with the IRS
This scenario can be compared to being backed into a corner during a game of chess. Your king is threatened all around and you know that it is impossible to win. What do you do? The answer is to go for a stalemate, as a stalemate is always better than a loss.
Rather than hiding a problem or ignoring it, deal with it as best you can. You may still have to pay tax or interest, but this is better going to jail.
A stalemate is not always a negative thing. You may not win the game of chess – or chase away the IRS, but at least you didn’t lose.
Watch Grandmaster Susan Polgar demonstrate how to use a stalemate in a game of chess in this two-minute video.
Page 252. Go For The Stalemate With the IRS Part I
Can’t see the movie? Click here.
Douglas Goldstein, co-author of Rich As A King: How the Wisdom of Chess Can Make You A Grandmaster of Investing, is an avid chess fan, international investment advisor and Certified Financial Planner (CFP®).