What are the most common reasons why an e-filed tax return might be rejected?

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An e-filed tax return can be rejected for a variety of reasons, ranging from simple data entry errors to more complex issues involving mismatches with IRS records or missing required information. Understanding these common causes can help taxpayers and preparers avoid the frustration of having to ask, “Why was my tax return rejected?” and ensure a smoother filing process.

1. Mismatch of Name and Social Security Number (SSN)

One of the most common reasons for e-file rejections is a mismatch between the name and Social Security Number (SSN) on the return and IRS records. The IRS verifies this information with the Social Security Administration. Errors like misspelled names, unreported name changes, or transposed SSNs can cause rejections even for dependents. When filing jointly, make sure the SSN matches the name of the primary taxpayer listed on the return.

2. Duplicate Tax Return Filing

If a tax return is filed using an SSN that has already been used for another return for the same tax year, the IRS will reject the second submission. This can happen if a taxpayer or preparer inadvertently files the return twice, or if someone else has already filed using the same SSN, which may be a sign of identity theft. The IRS will not accept multiple returns for the same taxpayer for the same year.

3. Incorrect Prior Year Adjusted Gross Income (AGI) or PIN

For authentication purposes, the IRS requires the entry of the prior year’s Adjusted Gross Income (AGI) or a specific PIN. If the AGI or PIN does not match IRS records, the return will be rejected. This is a common issue for taxpayers who have changed tax preparers, used different software, or did not file a return the previous year. It is also a frequent reason for the question, “why did my taxes get rejected?”.

4. Incorrect or Missing Information

Returns can be rejected for missing or invalid information in required fields. Common examples include:

Missing or invalid bank account or routing numbers for direct deposit or payment.
Invalid or missing dependent information (such as SSN or name).
Incomplete forms or schedules, or missing required attachments.
Incorrect filing status, such as selecting “Head of Household” without meeting the requirements.

5. Data Entry Errors

Simple typographical errors can cause a return to be rejected. These include:

Entering an SSN with all zeros or nines, or an invalid sequence.
Using special characters or spaces in name fields where not allowed.
Entering a date of birth that does not match IRS records .

6. Dependent Claimed on Another Return

If a dependent’s SSN is used on more than one return for the same tax year, the IRS will reject the second return. This often occurs in cases of divorced or separated parents both claiming the same child, or when a dependent files their own return and is also claimed by a parent.

7. Incorrect Employer Identification Number (EIN) or Name Control

For business returns, a mismatch between the EIN and the business name control (the first four characters of the business name as recognized by the IRS) will result in a rejection. This is a common issue for partnerships, corporations, and trusts.

8. Bank Account Issues for Direct Deposit or Payment

If the routing or account number provided for direct deposit or electronic payment is invalid, or if the account is closed, the IRS will reject the return or the payment request. The IRS validates the routing number against the Financial Organization Master File (FOMF).

9. Ineligible Forms or Schedules

Certain forms, schedules, or attachments may not be eligible for e-filing, or the software may not support them. Attempting to e-file a return with an unsupported form or schedule will result in a rejection.

10. Other Common Causes

Filing for a tax year that is not currently accepted for e-filing (e.g., too old).
Attempting to e-file an amended return when only paper filing is allowed for that year/form.
Using an incorrect or expired Electronic Filing Identification Number (EFIN) or Preparer Tax Identification Number (PTIN).

What to Do If Your Return Is Rejected

If your e-filed tax return is rejected, review the rejection code and message provided by the IRS or your tax software. The code will indicate the specific reason for the rejection. In many cases, you can correct the error and resubmit the return electronically. If the issue cannot be resolved electronically, you may need to file a paper return, including an explanation and a copy of the rejection notice to avoid late filing penalties.

Conclusion

The most common reasons for an e-filed tax return rejected by the IRS are data mismatches, duplicate filings, missing or incorrect information, and issues with dependents or bank account details. By carefully reviewing all entries and ensuring that names, SSNs, and other key data match IRS and Social Security records, you can minimize the risk of rejection. If you ever wonder, “Why would the IRS reject my tax return?” or “Why did my taxes get rejected?”, start by checking for these common issues. For further assistance, consult your Bennett Thrasher tax advisor, who can help you resolve any rejection and ensure your return is filed accurately and timely.

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