What Should I Do If My Accountant Messed Up My Taxes?
Trusting the experts to prepare your taxes can take a huge weight off your shoulders. Tax professionals are up to speed on the latest changes in tax law and can provide helpful advice on the deductions that will keep more money in your pockets.
It can make sense to have a professional tax preparer file your taxes on your behalf.
While having someone prepare your taxes is convenient, tax season can be a crazy time for accountants. They, like anyone under that kind of pressure, can be prone to making a mistake here or there – they are human after all. But when the pros make a mistake on your taxes, they don’t bear the impact of the consequences, you do.
You can miss out on valuable deductions and credits, end up paying more in taxes than you owe or even miss out on a refund. Mistakes in a tax return, however, are more common than you think and often you can correct your original return by way of an adjustment. Here’s what you need to do if your accountant messes up your taxes.
In This Article:
Understand The Mistakes
If you find a mistake in your tax return, take a deep breath and don’t panic. The CRA isn’t going to hunt you down, demand payment and threaten to drag you into tax jail like a CRA scam call might suggest. You can fix the mistakes, but first, you’ll have to find them.
Double check that the information you gave your accountant is reflected accurately. You have the ultimate responsibility to provide all relevant documentation that the accountant needs to make the most accurate return. Don’t blame the accountant if you’re expecting a deduction from your RRSP contributions, for example, but didn’t provide any of your contribution slips.
Let’s say you’re sure you gave the accountant everything they need and are still convinced the accountant messed things up. There are a few preliminary things you should do:
- Take your return and mark up obvious typos, anything that you either don’t understand or doesn’t meet your expectations.
- Prepare a list of questions to ask your accountant that will help you understand the decisions that went into preparing your tax return.
Don’t hesitate to give the CRA a call if you need to clarify any finer details. For individual tax inquiries, you can call 1-800-959-8281 from anywhere in Canada or the United States. Estimated call-in wait times are listed on the CRA’s contact information website and you can get through more quickly if you call in on certain days, like on Thursdays or Fridays.
What Does the CRA Have to Say About Mistakes on Your Tax Return?
The unfortunate part about discovering a mistake – regardless of who is to blame – is that you are the one on the hook to make things right with the CRA. That means that you are responsible for any additional taxes owed and any interest or penalties on unpaid taxes that result from errors in your return. You are also responsible for making sure that you or your accountant fix any mistakes.
Interest and Penalties
If the mistake in your tax return results in additional taxes that you owe the CRA, the CRA will start to charge interest, compounded daily, on the amount you owe starting May 1 (true to 2019) until the balance is paid in full. This interest rate changes every 3 months.
If your accountant filed your tax return after the due date, typically April 30 of the calendar year, the CRA will charge a late-filing penalty. The penalty will be 5% of what you owe plus 1% of what you owe for each full month your return is late (for up to a maximum of 12 months).
What’s worse is that if you were late in filing in any of the last 3 years, your late-filing penalty will increase to 10% of your owed balance, plus 2% of what you owe for each month your return is late (up to a maximum of 20 months).
Even if you can’t pay the taxes you owe by the due date, make sure your accountant files your return on time so you avoid the needless expense of the late-filing penalty.
What Does It Take to Fix a Mistake on Your Tax Return?
The CRA’s process to fix mistakes on your filed return is pretty straight forward. Before you or your accountant can make an adjustment to your filing, you will have to wait to receive your Notice of Assessment from the CRA. This is important- you may experience processing delays if you make an adjustment request to your return before you get your Notice of Assessment.
After you’ve received and reviewed the Notice of Assessment, mistakes in your return can be fixed in one of the following three ways:
- Online: using the CRA’s secure online service My Account (www.cra.gc.ca/myaccount), via the Change My Return option;
- By mail: Send a completed T1 Adjustment Request Form (T1-ADJ) and all supporting documents for the changes, to your tax center; or
- By mail: Send a signed letter (including your name, address, Social Insurance Number, phone number) and all supporting documents to your tax center detailing your request for an adjustment to your return.
Changes can be requested for any return from the last ten years, including the current tax year. Keep in mind that you will need to prepare and submit separate forms or letters if you want to make changes to returns from different years.
Once your adjustment has been filed, sit back and wait until the CRA has a chance to reassess.
How Long Does It Take for the CRA to Reassess a Corrected Tax Return?
Any corrections that are resubmitted to the CRA for reassessment will take some time to get processed. In most cases, it will take:
- Up to 2 weeks, if submitted online; or
- Up to 8 weeks, if submitted by mail.
In some cases, it is possible for the process to take longer if the changes you want to make are more complicated. If they need more information or have questions, the CRA may reach out to you or your accountant for answers or more documentation.
After the CRA completes their review, they’ll respond with:
- A Notice of Reassessment that shows the changes to your tax return; or
- A letter explaining why the CRA didn’t make any of the changes you requested or explaining why no changes were needed.
Whatever the outcome of the reassessment, you, not your accountant, are still responsible for settling what you owe with the CRA.
Work with Your Accountant to Adjust Your Tax Return
Once you have understood where the mistakes are, received some clarifying answers from your accountant and know what needs to be done to make things right with the CRA, it’s time to connect back with your accountant to review your case.
Lay out your situation and work with your accountant to address your concerns. Don’t forget, you’ll need your Notice of Assessment before your accountant can file your adjustment. Give them some time to make the necessary corrections; when it’s ready, make sure you review the changes before you give your accountant the green light to refile.
While some tax preparers may offer a goodwill gesture to make up for messing up your return, don’t let them off the hook that easily. Dig out the terms and conditions of your tax preparation contract and read them again carefully.
A quick look at the fine print will help you understand how they are supposed to handle this type of situation. The contract should clearly outline what actions they will take to make things right if they are at fault for making mistakes.
You may be entitled to a reimbursement and ongoing support; it’s possible that your tax preparer may be obligated to pay for the interest and penalties accrued and will offer advice on dealing with the CRA. However, it’s not likely they will pay for any extra taxes you owe. Keep in mind that the obligation may not apply if they determine that you were the cause of the error because you withheld any relevant information.
Learn from the Experience
Your best bet to safeguard against your accountant filing a tax return with mistakes is to read through the return before you sign off. Accountants will typically ask you to review your return and sign a statement agreeing that you certify all the information is correct and accurate.
Not reviewing before signing off can cost you a significant amount in extra taxes and penalties. When you review it up front, you’ll have the opportunity to understand the mistakes and have your accountant explain or fix the errors before he or she files with the CRA.
If you find mistakes after your return has already been filed, act quickly following the CRA’s process to limit the impact of an inaccurate return. If possible, aim for adjustments to be submitted before payments are due and interest or penalties kick in on May 1 (true to 2019).
At times, fixing mistakes on your return may also take patience to resolve. If you’re not happy with the way your accountant is handling your situation, it could also be a good time to start looking for a new tax preparer for the next year. When looking for the right accountant, it’s important to remember that not all professional tax preparers are created equal.
Start your search among your social circles for a referral from someone you trust. Search for reviews that can give you an understanding of the client experience and any pitfalls that you can expect. Once you’ve narrowed in on someone that might be a good fit, vet their credentials against their professional organization. For example, accountants holding a Certified Professional Accountant (CPA) designation will be listed in the CPA directory if they are a member in good standing.
Working with an accountant to fix mistakes on a tax return can be an eye-opening hassle and experience. Whether you are trying to get your return adjusted or have just come out the other end, take note of the lessons you learn along the way so you can minimize the chance of a repeat situation.
My husband has had to end his 35 + year relationship with his finance guy because he has moved to the USA and would prefer to have someone local. As a result, he received an invoice for over $5000 with no breakdown for what it is for. His regular fees with this guy are $400/month for his services, including completing his tax return. When we ask for an explanation of the $5000 invoice none is given. He has said he will not submit his taxes until he receives payment. What can we do?
That’s an unfortunate circumstance. Assuming your husband’s finance guy does more than just the taxes, it’s entirely reasonable to expect an invoice line item for how much it would take to complete just the tax return. At $400/month, $5000 seems like a year’s worth of fees. Maybe mr. finance guy will prorate your annual fee? Otherwise, it might be worth cutting ties and finding someone to redo your taxes for a more reasonable rate.
We took our taxes to a local firm because of the pandemic. Turns out my return was never filed. (I have proof) Then my partner’s taxes were filed incorrectly. Again, I have proof. Had to pay again to get this straightened out. She walks away?? Going to small claims court. $5,000 will be our claim.
Wow, that’s a terrible experience. First, I’m glad that your tax situation was straightened out, that your returns are now filed correctly and that you have proof! That local firm sounds shady- consider filing a complaint with both the Better Business Bureau and with your province’s Professional Accountants association. If you found them online, an honest Google Review could potentially save someone from a similar fate in the future. Here’s hoping that your claim pans out and she gets her just deserts.
How to a I file a complaint against my tax preparer? She did my 2019 taxes with her perfectly. 2020 taxes were a nightmare. I have a basic return, same as the years before. This year she made a error putting a daycare expense under a disability. No big deal let’s correct it.
Once I brought it to her attention she blamed CRA for the error, not her. She says I should be lucky she isn’t charging to me to refile. The refile took 1.5 months before they were even submitted. Now resubmitted she correct my daycare expense then disallowed my dependent.
Resulting in a I OWE the CRA $2000. Upon calling CRA I had to then go to a different competent accountant (80$) to refile my taxes for a 3rd time. Not only did I have to pay for my taxes twice I now will not receive my baby bonus or any of those perks until further notice. How do I hold her accountable for the extra payment for a tax return at least.
That sounds incredibly frustrating. I’m glad that you squared things away with the CRA and that you shouldn’t be on the hook for any penalties. The best way to hold her accountable is to have a frank and candid conversation with your accountant about your experience. Regardless of the mistake, it appears she did refile on your behalf without charging you in an attempt to make things right- that’s a point in her favour. Find out why she disallowed your dependent when she refiled and try to understand the error. Once you hear her out, ask if she would be willing to cover your cost incurred when refiling for a third time. If you feel it’s an unprofessional exchange, consider leaving an online review detailing your experience and efforts to reconcile. Ultimately, you can hold her accountable by giving repeat business or taking your business elsewhere.
When CERB was available in April, I phoned and asked a tax preparer at the firm I have used for over 10 years if I qualified for CRB. (My tax preparer seemed to have disappeared so another fellow stepped in).He asked if I made over $5000 in 2019 and I replied that I did. I have a small business approved by ODSP, and my Excel spreadsheet showed over $9,000. Then he said I qualified for CERB. In mid May, the same tax preparer did my taxes and never mentioned that in doing so he reduced my income below $5000. When CRB was announced I asked the same fellow if I qualified for CRB and was told that if I qualify for CERB then I qualified for CRB.
In December, while applying for another pay period of CRB, CRA asked me to supply them with supporting documentation. News about Net/Gross was circulating at the time so I called the tax preparer to find out whether he knew about this net versus gross. He yelled and insulted me for 30 minutes while I used my counselling skills to calm him down. The next call he apologized, and admitted he did know, then explained he would do revision and not claim all my expenses. CRA accepted the revision and I paid more taxes. Sent all requested 2019,2020,and later, 2021 business docs to CRA.
The tax preparer begin invoicing me for him fixing the fallout from his own mistake, three weeks after the revision was made. I posted a google review. He sent me an intimidation letter, which included: As I am their client…At no point am I to refer to anyone other than (their firm name) going forward. He stated they are not a CPA firm, (which they are). He threatened to sue me for $20,000 if I didn’t take the review down by 5pm that day. He also was going to sue me for an additional $35,000 for false accusations. (Not at all false).
To date, CRA has told me I didn’t qualify because I am on disability (even though I explained it is permanent not short term);
I left my work not due to COVID (my client ended my open-ended contract because her business died off due to COVID); I didn’t make the required $5000 (although they accepted the accountant’s revision and my extra tax payment).
I have physical and mental health issues, working as an environmental advocate until I’m no longer able. As a dyslexic I don’t do taxes, I rely on my tax accountant. This stress is taking an extreme toll on my body.
Hi C. Waters,
Sounds like a difficult string of unfortunate events. On the upside, it appears that you’re square with the CRA and that’s important. As for your tax preparer, consider filing a complaint with both the Better Business Bureau and with the Chartered Professional Accountants (assuming you’re in Ontario, here’s the complaint process). Compile all your correspondence and see the process through. Hope that this turns a corner for you.
How long does it normally take for an accountant to complete a return? And if they file late, do they pay the penalty or do I? I dropped mine off on the 11th. Checked in a week prior to cut off and they still had not completed my taxes. Now we have passed the due date and I will have to pay penalties. They claim CRA’s site was down. If I wanted at this point to switch my tax preparer, how do I go about getting my t4s, receipts back? I normally do my taxes myself but this was a weird year.
The time it takes to complete a return really depends on the accountant. It sucks, but reality is that your accountant may have been swamped despite having received all your info two weeks before the filing deadline. The CRA’s website was experiencing issues on the evening of April 29 but the service certainly has been up and running since. Have a frank conversation with your accountant and see if they’ll meet you in the middle. Your accountant might be open to covering some of your penalties to keep your business. If you want to switch your tax preparer, be prepared to wait for your documents to arrive by mail unless you can pick them up direct. Here’s hoping the near ahead isn’t as weird as the last.
Hi, your article was great but what if an error was made on my tax return where the RRSP deduction was not included and thus it shows that I owe taxes, although if I add the deduction I am actually eligible for a refund. With the deadline approaching do I have to pay the amount even though I’m not suppose to (to avoid any penalties). I can’t refile in time and won’t receive NOA until after deadline. Will I just have to send the amount and wait for it to be refunded. Thanks.
Of course, it is up to you, but I would pay the amount now (so as not to incur interest on the amount owing) and then immediately file an adjusted return that includes your RRSP deduction, at which point you should eventually receive a refund and get the amount you paid back. Whether you pay right away and then file an adjusted return or wait until your adjusted return is filed before making a payment, does not make much difference other than the interest you will temporarily incur on an outstanding amount. Of course eventually the CRA will call you asking for the outstanding balance, but your adjusted return will hopefully be submitted and looked after before that happens. Still, if you don’t want even a whiff of them on your back, pay the money now, file the adjusted return and get it all back in a refund later.
Hi, My tax preparer has made some mistakes and the return has been filed. Now he is not picking my phone and not replying to my emails. Is there a forum where I can make complain against my tax preparer’s unprofessional behaviour?
I would complain to a professional association for Canadian chartered accountants. I don’t know where you are located but CPA Ontario is also a regulator that handles complaints, so if you are in that province, go there and if you’re not, find your provincial counterpart.
Thank you for that article. How would you go about no advice given by the accountant? It resulted in me having to pay taxes that I wouldn’t have to pay if they advised me correctly. (I am filing in two countries and one position could have simply been filed in my home country to avoid potential issues in CA).
I want them to acknowledge their mistake and cover the cost that I am now faced with. I cannot adjust the return in my home country anymore. Thanks.
First, switch accountants but you can also file a complaint with any professional association they belong to such as the CPA Canada organization in your province. This will raise awareness at least that this particular accountant was not doing his job on your behalf.
There doesn’t seem to be any information specifically about RRIF’s & drawdowns when one partner becomes serious ill. Fo example, I decided to make a withdrawl from my RRiF (due to the facts
presented at that time) in order to use the shared income option with my husband. I did this to prevent a heavy tax burden if I was left holding my RRIF without that sharing option. Moreover,to make matters worse, their is no provision for this with the CRA when people are in such situations and forced to make costly decisions. My partner is doing much better now yet we made this drastic move without recourse. It’s these type of dilemas that need more attention in my opinion.
I’m sorry you had to go through that and I’m glad your partner is doing better. This article was meant more for a general audience as far as what happens if your accountant screws up. However, your situation is a great idea to potentially look into for another article, especially if the information on your circumstance from the actual CRA is limited.