Your tax return may get rejected if last year’s is still pending. Here’s how to fix the problem

If you're one of the millions of Americans still waiting on your 2020 tax return, you'll need to take a special step to avoid a rejection for this year's electronic filing, according to the IRS.

When filing digitally, you validate your return with the previous year's adjusted gross income. Typically, your tax filing software has these details if you're a returning customer. Otherwise, you can manually enter the numbers.

However, the validation process changes with a pending 2020 return.

If last year's return is still in limbo, you'll need to enter $0 for your 2020 AGI when filing online, said National Taxpayer Advocate Erin Collins in a hearing with the House Ways and Means Oversight Subcommittee.

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"That way you can file electronically, and you don't have to file a paper return," she said. "We need to get that message out to taxpayers."

While these directions only apply to digital filers, the agency urges everyone to file electronically with direct deposit to avoid delays.

Nearly 94.3% of individual tax returns were filed electronically during the fiscal year 2020, according to the IRS.

And there are similar instructions for nonfilers, who typically include certain Social Security recipients or those with yearly income below the standard deductions.

If you used the nonfiler tool in 2021 to collect the advance child tax credit payments or your stimulus check, the IRS says to put $1 for last year's AGI.  

"I would think hardly anybody knows about that one," said certified financial planner Larry Harris, director of tax services at Parsec Financial in Asheville, North Carolina.

If you don't follow these instructions, the IRS may not accept your electronic return, said Tommy Lucas, a CFP and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.

"We've seen that from individuals trying to file themselves," he said, explaining how AGI conflicts may trigger a confusing rejection email from their tax-filing software.  

Your return may also be pending if you received a CP80 notice about a missing 2020 return.

If you got this notice and it still hasn't been accepted, you should enter $0 for your 2020 AGI when filing this season, said Lucas.

"They're going to show $0 in their system, so that's what I would start with," he said. 

But if the IRS rejects your return with a 2020 AGI of $0, they may have processed last year's return after sending the notice, Lucas said, which means you can refile your 2021 return with your actual 2020 AGI.

While it may be difficult to reach the IRS by phone, you can double-check the status of your 2020 tax return by downloading a free IRS transcript from your online account.