Mistakes on tax returns aren’t at all unusual. Even tax preparers can goof. In fact, as many as three out of five prepared returns may have problems. If you find something wrong on your tax return, you can fix it, although you are liable for any extra taxes due and you might have to ante up a late payment penalty. The good news is that fixing tax return errors is pretty straightforward and can save you money, compared to the IRS finding the problem after you do.
What Mistakes to Fix
When you do your taxes, you might forget to include some income, overlook a deduction or miss claiming a tax credit. These types of mistakes are likely to change the amount of tax you thought you owed Uncle Sam. This means you either owe the Internal Revenue Service more money, or you are entitled to a bigger refund. You’ll need to file an amended return to fix these problems. Not every tax return mistake requires amending, however. If you simply got the math wrong or forgot to attach a schedule or form, the IRS says not to submit an amended return. The IRS computers correct mathematical errors. There may be no need to provide a missing form. If any action is required, the IRS will notify you.
When to Amend
If you find something wrong with your tax return and it means you owe more, the IRS says to file an amended return and pay as soon as you can to keep penalties to a minimum (generally, however, you must file it within three years from the date you filed the original return, or within two years after you paid your taxes, whichever is later). If you file your taxes early and then file your amendment prior to the tax return due date, you can avoid interest and penalties on any taxes you may owe after the amendment.
On the other hand, you might find that amending will get you some money back. If you are waiting on a refund based on the original return and you know the amendment will also result in a refund, hold off submitting the amended return until the refund check arrives. Don’t put off filing an amended return for a refund too long, though. You can only amend to get a refund for three years after the original tax return due date.
Procedure for Amending
You don’t use the same form for an amended return that you used when you originally filed. Instead of a 1040, 1040A or 1040EZ, use IRS form 1040X, “Amended U.S. Individual Tax Return.” The form is available on the IRS website and includes three columns: Column A is where you list the figures showing on the current return; Column C is where you show the corrected figures; and Column B is the difference between the figures in A and C. The back of the form (or the second page, if you're preparing it on or printing it from your computer) includes space for an explanation of the changes, if any. You can use the Form 1040X not only to correct your tax returns, but also to make certain elections, change amounts previously adjusted, or make a claim for a carryback due to a loss or unused credit.
If additional forms or schedules have to be revised, attach corrected versions to the 1040X. When you are amending because you owe additional taxes, send payment with the amended return.
Tax Preparer Mistakes
You might have your tax return prepared by a certified public accountant or other professional. If there’s something wrong with the return, you are still responsible for any additional taxes and penalties. Tax preparers often will pay penalties that result from a mistake they made, although they won’t pay any additional taxes. Assuming responsibility for penalties on the part of tax preparers isn’t automatic. Before you choose a tax preparer, find out what the policy is.
- The Morning Call: You May Have to Pay for Your Tax Preparer’s Error
- Internal Revenue Service: Topic 308 – Amended Returns
- Internal Revenue Service: Ten Facts on Filing an Amended Tax Return
- Internal Revenue Service: Form 1040X
- Internal Revenue Service: Form 1040X, Amended U.S. Individual Income Tax Return
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