Everybody makes mistakes – there are no exceptions. If you discover an error or something you missed on your return after you filed it, don’t panic.
Fortunately, most mistakes in life can be fixed, and your tax return is no exception.
When should I file an amended tax return?
A Form 1099 that slipped under the couch, a substantial business deduction you forgot, or any other item that changes your tax return may mean you need to file an amended return.
Sometimes you need to file an amended return for something that is not your fault. For example, your employer may send a corrected form, which means the amounts you used when you filed your return need to be corrected.
Unless the change to your tax liability is inconsequential, it’s best to change your return.
In some cases, you should file an amended return even if the changes don’t impact the amount of tax you owe. For example, if you entered an incorrect Social Security number, you should amend your return to avoid future problems.
How to file an amended return
The most important thing to know about filing an amended return is that you should not start over and file Form 1040 and all the attached forms again. You only file your complete tax return once. After that, you file Form 1040X – Amended U.S. Individual Income Tax Return and change only the items that are incorrect.
If the incorrect items are entered on other forms or schedules, you attach the corrected forms or schedules to Form 1040X. Do not attach copies of forms or schedules that do not change.
To file Form 1040X in TaxACT Deluxe, click Amend Federal Return under the main Filing tab.
You cannot e-file your amended return. Instead, the IRS requires that you print the Form and file it by mail.
Don’t forget your state income tax return. If you live in a state with a state income tax, you generally must amend both returns.
Am I in big trouble with the IRS?
Simply put, not really.
Even if you make a huge mistake such as forgetting to enter your Form W-2, the IRS has seen it all before. Unless you committed fraud or tax evasion, they won’t hold it against you. All they really want is the money.
That said, the sooner you fix any errors on your return, the better.
If you owe more tax because of a mistake on your return, the sooner you file and pay the tax, the less penalty and interest you will have to pay.
Don’t automatically assume you have to pay a penalty. If you amend your return before it is due (before April 15), then your amendment is timely, and no interest or penalty will accrue. Also, the IRS can be quite reasonable, especially for a first-time mistake. Attach a statement with your amended return, and specifically ask for an “abatement” of any penalty.
Besides, if you have to amend your return, you might as well get it over with. It probably won’t be as hard as you expect.
How can I avoid mistakes in the future?
You can avoid most tax return mistakes by organizing your information before doing your taxes and not waiting until the last minute to start your return. Tax software takes care of the math and checks your return for errors, missing information and potential savings.
It’s also very important to read your tax return before you file it. Comparing it to last year’s return can help jog your memory about deductions and other items.
Don’t hang on to your unfiled return too long, however, because you’re afraid it’s not perfect. It’s better to file your return on time, even if you have to amend it later, than to pay penalties for late filing.
Have you ever requested an abatement of penalty for a tax return?