If you’ve realized that you made an error on a previously filed tax return, the IRS allows you to correct these mistakes by filing an amended return.
Common Errors to Correct:
- Unreported income: W-2s, 1099s, or other income not originally included.
- Incorrect deductions or credits: Missing deductions, ineligible credits, or overstated deductions.
- Filing status mistakes: Incorrect filing status that doesn’t reflect your actual situation (e.g., single instead of head of household).
- Missed or incomplete forms: Forgetting to include schedules, like Schedule C for self-employment or Schedule E for rental income.
Here’s a guide on how to correct past tax filing errors:
Identify the Error
Common mistakes include unreported income, incorrect deductions or credits, filing status errors, and missed forms.
Review your original tax return and supporting documents to identify the exact nature of the mistake. Determine whether the error impacts your tax liability, deductions, or credits.
Gather Supporting Documents
To fix the error, you’ll need the correct documents. This might include W-2s, 1099s, receipts for deductions, or other tax forms that were omitted or incorrectly reported on the original return. Ensure you have accurate, up-to-date information to make the necessary corrections.
File an Amended Return (Form 1040-X)
To correct your federal return, use Form 1040-X, Amended U.S. Individual Income Tax Return. This form allows you to correct errors from previously filed returns. On Form 1040-X, you’ll need to submit the Form 1040X, a copy of the original return, additional supporting documents and forms, and any notices associated with adjustments on the form.
If you’ve corrected an error on your federal return, you may also need to file an amended state tax return. Verify with your state tax agency for the appropriate form and instructions. Most states have their own version of an amended return form like Form 1040-X.
Amended returns can be filed electronically if you’re amending electronically filed returns from the current or two prior tax years. If the original return was paper filed (sent to the IRS through the mail,) then the amended return must be paper filed. Make sure to include all corrected forms and schedules.
If the corrections result in an additional tax liability, pay the owed amount as soon as possible to avoid further interest and penalties.
Monitor for Refund or Payment Adjustments
If your amendment reduces your tax liability and results in a refund, the IRS will process the amended return and issue the refund. However, processing times for amended returns are longer than regular returns, often taking up to 16 weeks.
If you owe additional taxes, be prepared for interest and potential penalties. It’s a good idea to pay the additional amount promptly to limit further interest.
Correct Errors within the Statute of Limitations
You generally have three years from the original filing date (or two years from the date the tax was paid, whichever is later) to amend a tax return. There are many factors that extend the statute of limitations depending on the amending reason (bad or worthless securities or foreign tax credits.) Researching the statute of limitation is vital to understand deadlines for amended returns
If you’re filing an amended return to claim a refund or correct an overpayment, ensure you meet the statute of limitations deadline. If you miss this period, you won’t be eligible for a refund.
Respond to IRS Notices
If the IRS notices a mistake on your return and sends a notice (such as a CP2000 for underreported income), review the notice carefully and follow the instructions to address the issue. You may still need to file an amended return if the changes are more significant than the IRS adjustment or if additional issues are uncovered.
Correcting tax filing errors is straightforward if done in a timely and accurate manner. By filing an amended return, you can avoid potential penalties, interest, or future audits.
If the error is complex or you’re unsure about the correction process, consider consulting a tax professional, such as a CPA, enrolled agent, or tax attorney. They can help ensure your amended return is prepared correctly and minimize the risk of further issues with the IRS.
