Since the IRS automatically runs a name match on just the first few letters of your last name, it’s critical to get any name changes finalized before filing your tax return. If you were married, divorced, or changed your name for another reason over the past 12 months, you have a few steps to do to get things right for the IRS to avoid an audit.
What Can Happen with Mismatched Names on Taxes
If the name on your tax return doesn’t match the name associated with your Social Security number on file with the Social Security Administration, several issues can arise. First, your e-filed tax return may be rejected, preventing it from being processed. Additionally, while the IRS will still recognize your income as taxable, it may disallow any deductions you claimed. This could lead to a notice from the IRS indicating that you owe additional taxes, potentially accompanied by underpayment penalties. That’s why it pays to be prepared!
What Are the Next Steps to Avoid Confusion
The first step with a name change is to go to the Social Security office and file your updates immediately, before your tax return gets processed. You’ll also need to notify your employer. The W-2 you receive needs to match your new name, so they may need notice to make the update on their side of your paperwork. Likewise, if your W-2 is correct but the Social Security office still has your old name, you’ll be looking at trouble with the IRS.
What’s more, if you’re planning to have a significant financial transaction coming up, it may be wise to adjust the timing of the transaction or your name change to minimize potential complications. This will help avoid confusion.
Additionally, remember to update your name on other critical documents, such as auto titles, driver’s licenses, property deeds, bank accounts, loan agreements, beneficiary forms, and other accounts. If you are unable to complete the name change promptly, it’s best to use the name currently on file with both the Social Security Administration and your employer when filing your taxes. This approach can help you avoid automatic notifications of a name mismatch.
Visiting the Social Security Administration website can help advise you on the steps required for the name change process. Just remember: the steps aren’t always simple. Times have changed, and today, you need proof of citizenship and documents that show both original and new names in order to make the update.
Worried About a Tax Audit? We Can Help!
No one wants to deal with a tax audit, so whether you’re worried about the potential for one because of name change errors, or you have another concern, we’re here to help. Let NSO & Company help you get ahead of IRS troubles or address them head-on if you’ve already been contacted about an audit. You don’t have to face the conversations alone. We can help you get the proper documentation in order—send us a message today!