Tax time can be stressful when you’re rushing to get everything together before the filing deadline. Ideally, you’ll submit your return on time and get your refund soon after without any issue. But the IRS has a process in place if you discover after you've filed that you made a mistake. You can file Form 1040-X, the amended tax return, to correct your error.
Common Income Tax Mistakes
Errors are fairly uncommon when you use tax preparation software rather than attempt to complete your tax return yourself. The software asks you a series of questions and completes your return for you – correctly – based on your answers. The Internal Revenue Service estimates that paper returns have an error rate of 21 percent, compared to only 0.5 percent of electronic returns. But you might provide incorrect answers to those questions.
The IRS cites certain tax return errors that are more common than others whether you're preparing your own return or using software.
Filers often leave out crucial information. Even something as simple as one incorrect digit in your Social Security number can delay your refund. Check to make sure you’ve accurately completed every field, including your address, ZIP code and even your name. Don't enter "Chuck" if your legal name is "Charles." Also check the names and Social Security numbers of your spouse and dependents. Review all the numbers you’ve entered for accuracy. Make sure you’ve placed brackets around any negative numbers.
Double-check your filing status and the number of your dependents to make sure both are correct. Again, tax preparation software will take care of this for you, but you might not be sure of your filing status if you complete your own return. Both your status and your dependents can affect the standard deduction you're claiming, as well as numerous tax deductions and credits. Make sure you qualify to claim all the deductions and credits you're claiming. Be sure to attach all necessary forms and schedules that you had to complete to prepare your return.
Check the direct deposit information for your bank if you're expecting a refund and you're requesting payment this way. Otherwise, be sure to write “United States Treasury” in the "To" field if you owe taxes and have to send a check. Write your name, address, Social Security number, and the tax year in the memo section. Include your phone number on the check as well. Make sure you’re sending it to the right address for your location if you’re mailing the form or any money you owe. Also be sure to use the correct postage.
You can avoid all these minute details for paper checks if you make payment online at IRS Direct Pay. You can use this service even if you've mailed in a paper return. The site accepts electronic payments directly from your checking or savings account for no fee.
Finally, make sure to sign and date the return. This is an often-overlooked detail if you do things the hard way and file a paper return.
Most of these details can be easily avoided if you use tax preparation software to complete your tax return. The software will confirm everything for accuracy, and you can even make payment through the site. It will e-file your return for you.
The IRS and Tax Return Mistakes
The IRS will send you a notice by mail describing the error if it discovers a mistake with your return. The notice will tell you what you must do to correct the problem. Unfortunately, this will delay processing your return, so you'll have to wait if you're expecting a refund.
And the delay could cost you if you end up owing money when the error is fixed. There are penalties for late payments, and those penalties will continue increasing until you finally make payment.
Read more: Penalties for a Mistake on Federal Taxes
How to Correct a Mistake
You can file an amended tax return if you realize your own mistake and want to correct it. It may be something the IRS isn't set up to detect, such as misstating cash income or failing to claim a nice tax credit you're entitled to. The IRS will use your amended return to update the information it has on file for you. It will adjust your refund or tax debt accordingly.
Complete and submit Form 1040-X, Amended U.S. Individual Income Tax Return. You can use the form to correct information you entered on Forms 1040, 1040-SR, 1040-NR or 1040NR-EZ. You can use Form 1040-X to repair previous errors even after the initial filing deadline has passed.
E-filing is now possible for amended tax returns as well. You can file Form 1040-X online as long as the federal tax return you’re amending is for the 2019 tax year or later.
Otherwise, you can access Form 1040-X on the IRS website. It's interactive, so you can complete it online, then save it to your computer and print out a finished copy. The IRS also posts a list of addresses for sending in paper amended returns. The one you'll use depends on your state of residence and the year in which you're filing.
Amended Returns and Math Errors
The IRS typically catches math errors on its own. You might not have to amend your tax return in this case. The agency has processes in place to verify most figures on every income tax return. It will typically send you a notice when a math error is discovered. This notice will alert you to the error and tell you what to do to correct it. You can simply take the directed steps, if any, and that should be that.
Time Limit for Amending Returns
You have three years to file an amended tax return with the IRS, or two years from the date you last made payment on that return, whichever is later. The three-year clock begins when you file your original tax return, including any extensions. Maybe you couldn't complete your return by the April 15 deadline, so you filed for an automatic six-month extension to file by Oct. 15. You would have three years from the date you actually submit the return, even if it's Oct. 14.
It’s not unusual for taxpayers to discover they’ve made a mistake that applies to more than one tax year. You can file amended returns for multiple years as long as each is within the three-ear or two-year window of time. File a separate Form 1040-X for each tax year you’re amending.
The Failure-to-Pay Penalty
Your payment was due on April 15 of the year you originally filed if it turns out that you owe the IRS money. Filing an amended return doesn't delay this deadline for payment. This is the case even if you ask for and receive an extension of time to file. Any tax you owe would still be due on April 15.
The penalty for failing to pay your taxes by that date is 0.5% per month of the balance due, up to a cap of 25% plus interest. You can dispute the penalty if you can establish that you acted in good faith and had reasonable cause for not paying on time.
What Happens After You File?
You can monitor the status of your tax return using the Where’s My Amended Return? tool on the IRS website whether you’ve e-filed your amended return using tax software or by mail. It normally takes about 16 weeks for the IRS to process an amended return, but the agency warns that it will most likely take more than 20 weeks in 2022. It's still suffering delays due to the coronavirus pandemic.
The Where’s My Amended Return? tool is updated once a day, typically at the end of the day. The usual rule is to wait three weeks after you’ve sent in the amended return before you call to check on the status, but that's not the case in 2022, either. The IRS asks that you do not call, and don't file a second return simply because you've heard nothing.
Mistakes on State Tax Returns
You may find you’ve made a mistake on your state tax return if you live in a state that has an income tax. Each state has its own process for correcting returns. Check with your state's Department of Revenue if this is the case.
- IRS: Theme 6: Understanding the IRS
- IRS: Topic No. 303 Checklist of Common Errors When Preparing Your Tax Return
- IRS: About Form 1040-X, Amended U.S. Individual Income Tax Return
- IRS: Now Available: IRS Form 1040-X Electronic Filing
- IRS: New Information for Form 1040-X Filers
- IRS: Where's My Amended Return?
- IRS: Form 1040X, Amended U.S. Individual Income Tax Return, Frequently Asked Questions
- IRS: Paying Your Taxes
- IRS: Tips for Taxpayers Who Have To Amend a Tax Return
- IRS: Understanding Your CP16 Notice
- IRS: Where to File Addresses for Taxpayers and Tax Professionals Filing Form 1040X
- IRS: Direct Pay With Bank Account
- IRS: Failure to Pay Penalty
Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a ghostwriter for a credit card processing service and has ghostwritten about finance for numerous marketing firms and entrepreneurs. Her work has appeared on The Motley Fool, MoneyGeek, Ecommerce Insiders, GoBankingRates, and ThriveBy30.