For many people, death and taxes might as well be the same thing. Tragically, taxes show up every year, while death only shows up once.
But if you made a mistake on your taxes, it can feel like the torture never ends.
If you’re dealing with tax problems, here’s what you need to do to correct your mistakes.
Know the Problem
First, you need to know what the problem is with your taxes.
The good news is that you’re not alone. Millions of people make mistakes on their taxes every year, some of them resulting in major IRS problems.
The most common tax mistakes include:
- Wrong or missing Social Security number
- Wrong names
- Math mistakes
- Incorrect filing statuses
- Errors in figuring credits or deductions
- Wrong bank account numbers
- Electronic PIN errors
- Forms not signed or dated
- Mismatches between your tax return and your form 1099
These seemingly minor problems can cost you big. These can result in:
The first thing to do is fully understand what went wrong and what you can do to fix it.
When to Amend
The good news is that the IRS knows the average person isn’t a tax preparer or tax attorney. They’ll allow you to correct a mistake if you make one.
Any of the following errors justify filing a tax amendment:
- Modification to the content of necessary forms
- Changes to your filing status
- Requests for claiming or removal of tax deductions
- Updates to the number of dependents
- Unstated changes in the amount of income earned
If you spot an error, take a deep breath. The IRS knows that mistakes happen. Get in touch with a tax attorney to make sure you have everything in order to make the change appropriately.
When NOT to Amend
That said, there are some instances where the IRS does not require you to file an amendment to your tax return.
You don’t need to file an amendment if:
- You forgot to submit supporting documents
- You erroneously created math errors
- You failed to attach a schedule or a required form
The IRS will automatically correct minor math errors on your tax returns. They’ll typically contact you in writing if they need additional forms from you.
If you’re not sure whether or not an error justifies an amendment, talk to your tax attorney. They can help figure out whether a mistake is big enough to need a tax amendment.
Gather Your New Tax Documents
If they determine that you do need to file an amendment, then it’s time to get organized.
The first step is to gather all of your new tax forms.
If you forgot to include a schedule, get a copy of that. Include any new W-2s or 1099s if you underreported your income. If you’re claiming a new deduction or tax credit, you’ll need to include documents supporting your eligibility, such as receipts.
You should also have a copy of your original tax return so that the IRS can spot the problem more easily (as a rule, the easier you can make it for the IRS, the easier this will be for everyone).
Regardless of what your mistake was, you will need the form 1040X.
The form 1040x is the only form you can use to amend your personal income tax returns. It can be used to:
- Correct form 1040 (individual income tax return)
- Correct form 1040 EZ (income tax for single and joint filers with no dependents)
- Correct form 1040-NR (nonresident alien income tax return)
- Correct form 1040-NR EZ (certain nonresident aliens with no dependents)
- Make certain elections after the deadline has passed
- Change amounts adjusted by the IRS
- Make a claim for a carryback due to a loss or unused credit
If you’re filing to request a refund for joint overpayment offset against a past-due obligation of your spouse, don’t file the form 1040X–file form 8379 instead.
To file the form 1040X, you’ll need a copy of the form, a copy of the return you’re amending, a notice of adjustments to that return, and instructions for the return you’re amending.
On the first page of the form, you’ll see three columns.
In Column A, put the amounts you originally stated on your return. In Column C, put the corrected figures. Column B shows all net differences between the two. On the second page, include explanations for the differences and changes behind each tax error.
Sorry, No E-Filing
Yes, Turbo Tax and similar tools are delightful inventions for those of us who have no clue what to do on our taxes and can’t afford an accountant.
Tragically, Turbo Tax won’t help you with filing an amendment.
Unlike filing for initial returns, the form 1040X cannot be filed electronically. You have to send the form by certified mail.
If you’re sending amendments for more than one year, you’ll need to include a separate form 1040X for each individual year, along with the appropriate documents (that’s why we told you to get your tax documents in order first).
Time Limits on Corrections
That said, there are time limits on making corrections to your taxes.
As a rule, the IRS gives taxpayers three years to make corrections to their taxes, but the sooner you make the corrections, the less interest you’ll have to pay on your tax debts.
Keep in mind, however, that your timeline changes if you owe the IRS money from your original filing.
If you didn’t pay enough on your original return, you have two years to make changes, starting from the date you last paid your tax bill. Keep in mind that interest accrues in the meantime.
However, if the two-years-since-payment date comes after the standard three-year time limit, the IRS allows you to use the later date as your final deadline.
Let’s say you paid your taxes on March 14, 2018, and paid $500 instead of the $600 you owed. You paid the final $100, plus interest and penalties, on January 10, 2019. In that case, you have until January 10, 2021, to amend the original filing (instead of March 14, 2018, the usual three years).
If, however, you paid your bill on June 10, 2018, instead of January, you would have until June to amend your taxes.
Similarly, if you paid your taxes late but not that late, and the three-year revision timeline gives you more time to amend, you can take the three-year time limit.
Amending a Tax Return
So, you’re ready to amend your return. Great!
Keep in mind that your taxes are taken as a cohesive unit, which means that if you spot an error, you need to review your taxes all over again to make sure that mistake didn’t compound on other areas.
If you make mistakes in your federal returns, it could affect your state returns as well.
So, if you spot an error, it’s vital that you get in touch with a tax professional right away to make sure that the mistake didn’t reverberate through your entire tax return.
How It Will Affect You
It usually takes the IRS about 8 to 12 weeks to process your form 1040X.
If you owe a balance from changes on your original return and it’s due before the due date of your original return (usually April 15), file your form 1040X and pay by the due date. Disregard any filing extensions.
If you file and pay after the due date of your original return, know that the IRS can and will charge penalties and interest.
From there, abide by the timelines we’ve already laid out (three years or two years, depending on your situation) and you should be fine.
Know Your Rights
You have three important rights when it comes to your taxes:
- The right to be informed
- The right to finality
- The right to pay no more than the correct amount of tax
Taxpayers have the right to know what they need to do to comply with tax laws and are entitled to clear explanations of laws and procedures.
You also have the right to know the amount of time you have to challenge the IRS and the maximum amount of time the IRS has to audit an individual tax year.
Finally, you have the right to pay only the amount of tax due and to have the IRS properly apply your tax payments.
If any of these rights are not being met, you need to speak with a tax attorney.
Don’t Face Tax Problems Alone
Tax problems can feel like summiting Mount Everest — long, expensive, exhausting, and an awful lot of trouble for twenty minutes of payoff.
But with the right tax attorney, you can conquer your tax problems with minimal stress and pain.
We’re here to help you overcome your mistakes and handle the IRS with grace and aplomb. If you need to speak with us about your options, use our contact page to get in touch.