Just when you are patting yourself on the back for filing your tax returns on time, it suddenly dawns on you that you made a mistake. Maybe you forgot to declare your income from walking your neighbor's Pomeranian, or you didn't realize you couldn't claim your two cats as dependents. Oops.
First of all, don't stress. You may have visions of an IRS SWAT team putting you in cuffs, but it's actually pretty easy to file an amended return. Here's how to set the record straight with the IRS. You might even get some extra money.
When to file an amended tax return
You don't need to file an amended return for a simple math error, or if you forgot to attach a form. The IRS will catch those kinds of mistakes for you and request any missing forms, so don't start panicking if you simply forgot to attach a W-2.
You do need to file an amended return if you made an error in providing information to the IRS that could impact your refund or what you owe. If you need to alter your filing status, change the number of deductions or credits you claim or correct the amount of income you declared, the IRS recommends filing an amendment to your past return.
If you're expecting a refund, you have three years from when you originally filed or two years from when you paid taxes for the year you were owed a refund. It's best to wait until you have already received the original refund before submitting the amended return.
If you owe the IRS money, file your amended return right away so you can avoid or at least minimize any possible interest and penalties, which start accruing right after tax day.
How to file an amended return with the IRS
There's good news and bad news about filing an amended return. The good news is you usually only have to submit one form to do it. The bad news is e-filing of amended federal returns isn't allowed. If you used tax software to file your original return, you can typically obtain the forms for free from that program to correct your mistake — but you must print out the corrected forms and snail mail them.
If the changes you made to your federal tax return also affect how much you owe the state, you'll need to file an amended state return as well. Some states, like New York, allow you to e-file an amended state return.
If you didn't use tax software to file your original return, you can download Form 1040X, Amended U.S. Individual Tax Return, from the IRS. Both the form and instructions can be found here.
After you've entered the necessary corrections, you'll have a chance to explain your mistake in full sentences. "I forgot to claim a dependent" or "I didn't deduct my individual retirement account contributions" are clear explanations for why you're amending your return. The better your explanation, the more quickly the IRS should be able to process the amended return, according to the US Tax Center.
What paperwork you must submit with an amended return
Include a copy of the tax return being amended as well as copies of any forms you filed that were affected by the change. If you owe more money because of your amendment, you can pay directly out of your checking or savings account using IRS Direct Pay, or you can mail a check. If you're late in paying, interest will be charged from the due date of the original return. The IRS will compute your interest and penalties and send you a notice of the amount due, Forbes notes.
The address where you mail your return depends on where you live, so check the instructions for Form 1040X to find the right location. If you're amending your return for multiple years, you must send a separate form, in a separate envelope, for each year that a mistake was made.
Next, sit back and wait. The IRS takes its sweet time processing amended returns — up to 16 weeks — so it will be a good long while before you get any additional refund money in the mail.
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