Made a Mistake on Last Year’s Tax Return? Here’s How to Correct it (and What Can Happen if You Don’t)

What should you do if you discover that you made a mistake on last year’s tax return when preparing your return in 2025? Or, what if you know that you underreported your taxable income last year, and you want to avoid facing scrutiny from the Internal Revenue Service (IRS) in the future? Find out from New Jersey tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.

What Should You Do if You Discover a Past Mistake When Preparing Your Federal Tax Return in 2025?

Regardless of why you underreported your taxable income to the IRS, coming current on your federal tax obligations is important. Not only could you already be facing interest and penalties; but, if the IRS audits your returns, you could face additional consequences as well.

So, what should you do? Depending on the circumstances at hand, coming current on your (or your company’s) federal tax obligations and avoiding additional liability may involve one or more of the following:

• Filing an amended or delinquent return
• Submitting an offer in compromise
• Submitting a voluntary disclosure
• Seeking an installment agreement
• Negotiating a settlement with the IRS

To be clear, not all of these are options in all circumstances—and some of them are only options once you have accurately filed all required returns. A New Jersey tax lawyer can help you make an informed decision about how best to move forward, and then your lawyer can communicate with the IRS on your behalf as warranted.

What Are the Consequences of Failing to Correct a Mistake on Last Year’s Return?

Let’s say you don’t correct your past mistake—what are the consequences? If you are behind on your federal taxes, you could already be facing liability for interest and penalties (which may be continuing to accrue), but this could also be just the tip of the iceberg. Failing to promptly correct previous tax mistakes can have consequences including:

• Interest on past-due amounts
• Accuracy-related penalty
• Other IRS penalties
• IRS audit or investigation
• Criminal penalties for tax evasion or tax fraud

While facing federal criminal tax evasion or tax fraud charges might sound severe, this is indeed a real possibility. The IRS has been cracking down on tax evasion and tax fraud in recent years, and IRS Criminal Investigation (IRS CI) routinely targets both individual and corporate taxpayers suspected of knowingly failing to pay what they owe. To protect yourself against unnecessary consequences, you should discuss your situation with a New Jersey tax lawyer as soon as possible.

Request an Appointment with New Jersey Tax Lawyer Kevin E. Thorn

If you need to correct a mistake you made when filing your taxes last year, we encourage you to contact us promptly for more information. To discuss your options in 2025 with New Jersey tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, call us at 201-842-7696 or contact us confidentially online now.