How to Correct Mistakes on a Tax Return after Filing

If you discover that you have filed a Federal tax return with one or more mistakes, you may want to file an amended return to correct the errors. However, consider the following before rushing to file corrections;

* If you discover mistakes soon after you have sent in the original return, it may be best to wait before sending in an amended return to avoid complicating the process.

* Unless IRS has sent you a notice pointing out a mistake, there is no need to file an amended return if you owe only several dollars due to the mistakes. IRS may not care at all, especially considering that the 2010 annual deficit of roughly $1,600 billion ($1.6 trillion) averages out to about $5,300 per year for every person in the US.

Amend or correct your previous tax return using Form 1040-X. However, if you are attempting to obtain a refund (whether new or additional),  you must file Form 1040-X by the latest of the following limiting dates;

1) – 3 years after the due date of the original return (typically April 15) if you filed the return by that date.  

2) – 3 years after the date the IRS received your return, if you had properly filed for an automatic extension.

3) – 2 years after the date you paid the tax.

Most often, the 3 year limit will apply for refunds.  

The most direct way to obtain necessary forms and publications is through the IRS web site; Forms and Publications.

Form 1040-X

As of this writing (12-12-10), the current Form 1040-X is different than previous 1040-X forms. In the past, you had to fill out two columns of numbers. Now, you only fill out one set of numbers on the form.

To correct a mistake with your Form 1040 (including the various short versions), you need the following;

1) – Form 1040-X (current version). This may be obtained most easily from the IRS web site that provides forms and publications. (IRS Forms). Under “Download forms and publications by:”, click on “Form and Instruction number (PDF)”. Then find “Form 1040-X” near the end of all the various 1040 forms and instructions (type “1040” in the Find box and scroll down).

2) – Instructions for Form 1040-X are available as a separate file, alongside Form 1040-X.

3) – Copy of the actual Form 1040 return (that you filed) to be amended (corrected) along with the original instructions for that return. Currently, instructions for prior years can be obtained from the IRS web site for any return going all the way back to 1938!.

Preparing Form 1040-X

Form 1040-X is essentially a summary form.

Before filling out Form1040-X, you must perform whatever calculations are necessary to correct the mistakes that were made on the original return.

Although the instructions may seem daunting at first, it is not all that difficult to follow. Most of the instructions will not apply if you are simply making corrections for one or two mistakes.

After filling in checkoff boxes in the A and B sections, you list reasons for making corrections in section C. There is no need to write an essay!

There are then just 17 lines to be filled in with numbers that you must obtain (from other forms) or calculate. Much of the necessary information will be taken directly from the original return. Lines 18, 19 and 20 are derived from the previous lines. Lines 21 and 22 are simply to determine how you want to apply any refund.

If you are changing exemptions, you must complete the flip side of the form.

Issues To Be Considered

Consider the following issues before preparing Form 1040-X;

* Form1040-X can not be used to obtain refunds of penalties and interest that you may have paid or that have been charged by IRS (and not yet paid).

* Filing status can not be changed from joint to separate.

 * When requesting a refund, make sure numbers are correct. If you request more than you are entitled to, the IRS can assess a 20% penalty.

 * When filing another amended return for a tax return that has previously been amended, you must also have a copy of the previous Form 1040-X and you must use the corrected numbers from that return. Obviously, this can complicate the process.

 * Your state tax return (for the same tax year) may also have to be amended.