The information in this article is up to date for tax year 2023 (taxes filed in 2024).
Tax preparers often encounter a common issue – how to rectify the reject codes on their client’s returns. Getting a federal rejection can be frustrating if you are unfamiliar with the code’s meaning or how to fix it. This article aims to provide an overview of the most frequent IRS reject codes along with actionable steps to resolve and resubmit the returns efficiently and quickly.
Reject code R0000-905-01
This reject code indicates the EFIN used to file the return isn’t in the IRS database or that it’s not in an accepted status.
To correct Reject Code R0000-905-01:
- Verify that you have entered the correct EFIN in your software setup.
- It’s possible your EFIN is inactive due to an outside circumstance, for example, undeliverable mail. If so, an Owner, Responsible Official, or authorized Delegated User of your firm can make the appropriate updates to your application. To get this issue resolved, log in to your IRS e-Services account or call the IRS E-File Help Desk at 1.866.255.0654.
Reject code F1040-164-01
A return receives this rejection if the taxpayer claims the Earned Income Tax Credit (EITC) after the IRS disallowed it in a prior year.
To correct reject code F1040-164-01:
- Did the taxpayer receive a letter from the IRS indicating they could once again claim the EITC? If so, complete Form 8862 and retransmit the return.
- If the return is rejected again for a reason related to the EITC, the taxpayer may not yet be able to claim the EITC. The IRS advises on steps to take if a claim for EITC is denied. Your client may need to pay back claims (plus interest) before claiming the credit.
Reject codes FW2-502 and F1099R-502-02
There are four rejects that contain the number 502, and all are due to a mismatch between the Employer Identification Number (EIN) and the first four letters of the company name on the return. The most common of these rejects relate to either a Form W-2 or 1099-R.
To correct reject codes FW2-502 and F1099R-502-02:
- Verify that both the EIN and the name you entered on the return match the original tax documents and correct as needed.
- If the information entered on the return matches the tax documents, contact the payer to verify the documents are correct. Get a corrected Form W-2 or 1099-R if possible, or file the return using Form 4852 as a substitute.
Reject codes R0000-500-01 and R0000-503-02
The first reject indicates a mismatch between the primary taxpayer’s social security number (SSN) or Individual Taxpayer Identification Number (ITIN) and the first four letters of their last name. The second reject is similar but applies to the spouse or secondary taxpayer’s information. The Social Security Administration (SSA) provides the data that the IRS uses to verify the name and SSN, while the IRS issues ITINs.
To correct reject codes R0000-500-01 and R0000-503-02:
- Verify SSN or ITIN and the last name spelling on the social security card or ITIN card. If the data entered on the return is incorrect, make the corrections and retransmit the return. Also, if a name contains four words (more than one middle or last name), the SSA may be differently recording which of those is the last name. Generally, database verification system counts the third name in the series as the last name.
- If the primary or secondary taxpayer has notified the SSA that they have changed their name, it may take the SSA up to 10 days to notify the IRS after they have updated their files. Once the IRS’s database has been updated, the return can be resubmitted with the new name.
- If the information in the return is entered correctly, the return will need to be paper filed. The primary or secondary taxpayer will need to liaise with the SSA to verify and/or correct their information on file. They can call the SSA at 800.772.1213 or check for a local SSA office to assist.
Reject code R0000-504-02
This reject code indicates a mismatch between a dependent’s SSN and the first four letters of their last name. As with the primary and secondary taxpayer, the IRS uses data provided by the SSA to verify the name and SSN. The reject message will indicate the dependent in question, so if the message says, “Additional Information: XXX-XX-1234”, the dependent whose SSN ends in 1234 is the one triggering the reject.
To correct reject code R0000-504-02:
- Verify the dependent’s last name and SSN or ITIN with their social security card or ITIN card. If the data entered on the return is incorrect, make the correction and retransmit the return. If the SSN is correct and the name contains more than three words, the SSA may be differently construing which name in the series is the last name.
- If you have verified the information and the return is still being rejected, advise the taxpayer to contact the SSA to verify the dependent’s last name. If a correction is required, it may take the SSA up to 10 days to notify the IRS after they have updated their files. Afterward, an electronic return can be resubmitted.
- If the information in the return is entered correctly, the return will need to be paper filed. The taxpayer will need to liaise with the SSA to verify and/or correct the dependent’s information on file. They can call the SSA at 800.772.1213 or check for a local SSA office to assist.
Reject code IND-517-01
A return rejects with this code when a dependent on the return has already been included as the primary taxpayer or spouse on another return and did not indicate that they were someone else’s dependent. This rejection is common on the returns of parents who are still claiming a young adult who also files their own tax return to recoup their own refund.
To correct reject code IND-517-01:
- The taxpayer will have to paper file the return, with or without the dependent. If filing with the dependent, the dependent will need to file an amended return indicating they are a dependent on someone else’s return.
- If there a dispute about the dependency, the taxpayer should include documents with the return bolstering their claim.
Reject code R0000-507-01
This reject code indicates a dependent SSN claimed on the tax return has been used on another tax return. One common scenario for this rejection is when separated or divorced parents both claim their child. It could also occur due to miskeying the SSN, but the first four letters of the otherwise unknown last name would also need to match.
To correct reject code R0000-507-01:
- Verify the accuracy of the last name and SSN or ITIN. If the data entered on the return is incorrect, make the correction and retransmit the return.
- If the data is correct, a paper return will need to be filed. Include with the return any documents that will bolster the claim that the taxpayer should be able to claim the child as a dependent, e.g., Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents from the custodial parent or a copy of the divorce or separation agreement.
Reject code IND-515-01
This reject code means the primary taxpayer’s SSN has already been included as the primary taxpayer on another return.
To correct reject code IND-515-01:
- First, verify the SSN is accurate, and if not correct and resubmit the return.
- If the SSN is correct, ask the taxpayer if they already filed their return themselves or with another tax preparer. They may have started the return with another preparer who went ahead and filed without their permission. The return you have prepared will need to be paper filed. If the taxpayer has questions refer them to the IRS Tax Assistance Office at 1.800.829.1040.
Reject code IND-116-01
This reject indicates a dependent for whom the Child Tax Credit is claimed is ineligible due to their age (older than 16). This can occur due to miskeying the dependent’s birth year, or it can occur due to the IRS having the dependent’s birth year incorrect in its database. The reject message will indicate as “Additional Information” the last four digits of SSN for the dependent in question.
To correct reject code IND-116-01:
- Verify the correct date of birth, and, if it’s incorrect, correct and resubmit the return.
- If the date of birth on the return is correct, it will need to be paper filed along with supporting documentation.
Reject code F1040X-001
There are four reasons Form 1040-X might reject with this code:
- The filing status on the amended return differs from the original return.
- The original return was not e-filed.
- The original return was not a Form 1040 or 1040-SR.
- The primary taxpayer SSN and/or the spouse SSN don’t match the original return.
To correct reject code F1040X-001
- Paper file the amended return.
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