Now that the tax deadline has passed, you might wake up in a cold sweat and remember you forgot to add that interest from your bank account, or missed a 1099...
What do I do when I make a mistake on my tax return?
There are a few options:
- You could just wait and see if the Internal Revenue Service (IRS) catches the mistake. However, with document matching and computer analysis, this is more likely than not – and will also result in penalties and interest.
- You can file an amended tax return and correct the error.
- You can continue waking up with night sweats.
The best choice and really the only choice is to file an amended return...
What do I need to know about filing an amended return?
You will need to file a Form 1040X, Amended U.S. Individual Income Tax Return. This is a corrective approach that functions like a voluntary correction. Remember that any changes to your tax return may impact other areas, like credits and deductions, or Alternative Minimum Tax computations.
The 1040X will also ask you why you need to file the amended return. You should be honest and concise when answering this question. The answer is part of your tax return and will be admissible in the event your return is audited or contested.
Filing an amended tax return does not get you out of having to pay the tax on time. If the amended return results in a tax bill, you could be on the hook for penalties because the payment was not made by the April 15 deadline.