Contributed by: CoryF, FreeTaxUSA Agent, Tax Pro
I prepared my tax returns and am ready to file them. I checked each entry and software page twice and all my information is correct. I went to submit my tax return for e-file, and it was rejected. What do I do now?
If your tax return is rejected for e-file, stay calm and follow these steps:
- Read the rejection notice: Take a deep breath and carefully review the rejection notice. Understand the specific issue raised by the IRS or the e-filing system.
- Identify the problem: Pay attention to the requested change. It could be related to incorrect information, missing details, or other issues.
- Make corrections: Address the issue promptly. Update the necessary information or fix any errors.
- Resubmit: Once you’ve made the corrections, resubmit your tax return for e-file.
Remember, e-file rejections are common, and resolving them promptly ensures a smoother process. This article discusses the three most common e-file rejections and how to clear the issues:
- Prior year adjusted gross income (AGI) or PIN
- Form 8962 required
- Identity protection personal identification number (IP PIN) required
Prior year AGI or PIN
This is the most common e-file rejection. The IRS uses the prior year AGI information on file in their e-file database to protect the privacy and security of your tax information. Current year e-filing is based on the tax information from the immediate prior year return. The rejection can occur for many reasons. For example, if there is no prior year filed return, if the return was filed late, the return had to be mailed, or the return was amended, this e-file rejection can be triggered.
To resolve this issue, follow these steps:
- Verify that you are entering the correct figure from your last year’s tax return. As of this article, AGI is usually found on Form 1040 or Form 1040-SR line 11. If you were using the wrong AGI number, try filing again with the correct AI number from line 11 of your last year’s return.
- If you were using the correct number, verify that your return was filed and accepted by the IRS by requesting a tax return transcript online from the IRS.
- If the return wasn’t filed according to the IRS transcript, you should make sure you file last year’s return as soon as possible.
- If you were initially using the correct number or if the return wasn’t filed, you'll need to resolve the e-file rejection. Follow this menu path:
- Final Steps > Prior Year AGI or PIN.
- Mark that you didn’t file a return for the last year. Save and Continue. This will trigger the software to use zero as your prior year AGI.
- Continue through and make a new attempt to e-file your return.
- If you are filing a married joint return and the e-file rejection says yours or your spouse’s AGI is incorrect, look for an option that says only you or your spouse filed a return in the prior year and mark whoever the rejection doesn’t say has incorrect AGI now. This will set one of your AGI’s to zero.
If the return isn’t accepted after trying this method, you will likely need to mail your federal and state tax returns as applicable. You may also attempt to call the IRS to see if they can help you understand the issue with your tax return more clearly.
Form 8962 required
This rejection is tied to marketplace insurance from the federal government as administered by your state health insurance. There are many ways this rejection can apply to you. These include sharing an insurance policy with multiple family members across tax returns or starting a plan, ending it mid-year, and forgetting the submission. The health insurance plan administrators are required to send a Form 1095-A to everyone covered by the marketplace insurance. While this form is intended to be mailed by January 31st of the year, if you haven’t received it, it may have gotten lost in the mail, or you may have changed your address mid-year without updating the insurance administrator. You might have also misplaced the letter, or it made it to the trash. The next best thing is to search for the form on healthcare.gov
To clear this rejection, you must report the marketplace insurance values on your tax return. This can include reporting 100% of the amounts, or in the case of a shared plan, some percentage of ownership to be worked out between the individual family members on the plan.
Once you sign back into your account, you can move to the marketplace insurance page by following this menu path: Deductions/Credits > Marketplace Health Insurance (1095-A) to enter Form 1095-A and proceed with answering the questions about your insurance plan. Form 8962 will be generated by your input off Form 1095-A in this section.
In the very rare exception you feel there is no way you have or had marketplace insurance, there is a way to move to a statement page to explain the circumstances in detail. This requires you to read the rejection notice carefully and follow the link to the statement page imbedded in the notice.
Identity Protection personal identification number (IP PIN) required
The best form of identity protection is the IRS IP PIN. A separate 6-digit PIN is generated each year and sent to the taxpayer via regular mail to ensure security in filing your tax return. With the IP PIN, once it’s requested you'll then be required to include it on every future tax return. The rejection occurs when an e-filed tax return is submitted without entering the 6-digit PIN. This is separate from the e-file 5-digit PIN required when e-filing. Until the right PIN is entered, each e-file attempt will be rejected. If a mailed return is necessary, the IP PIN is still required to be entered for successful IRS acceptance.
Another possible (rare) situation is that you are e-filing multiple tax returns in the same year. A new IP PIN is required for each e-filed return. The solution is to generate a new IP PIN on the IRS website and you'll need to allow time for the new IP PIN to take effect at the IRS.
Once you have the most current IP PIN either via mailed letter or using the link to the IRS website, you can sign into your account to enter the IP PIN. In FreeTaxUSA, follow this menu path: Misc > Identity Protection PIN (under Personal group).
