A Substitute For Return is when the IRS Files a Return For You.

Have you ever owed the IRS money and you don’t know why? The IRS recently issued a bulletin that 918,600 taxpayers still have not filed a federal income tax return. So what happens when a taxpayer does not file a return? The IRS will file a return on behalf of the taxpayer based on the information provided to them and this is referred to as a Substitute for Return (SFR).

So How Does a Substitute for Return work?

The IRS will take an educated guess about how much taxes a person might owe based on the information they have. This can be from a W2, 1099 or any other source of income that is reported to them. Once they have this information they will file a return with no expenses or deductions that you might get otherwise. Once they have a dollar amount that becomes final from that Substitute for Return, they can now legally collect on that tax year.

How Do I Correct a Substitute for Return?

This is very simple, the IRS has to legally accept an Original Return filed by you. Therefore, you should file your own return because you will most likely owe less money to the IRS.

If you don’t understand why you owe money to the IRS or you need help understanding your tax situation, please contact a tax professional at Wolf Tax before contacting the IRS. It is important you know your rights when it comes to the IRS.