Believe it or not, we’re just a few short weeks away from the start of the 2009 tax filing season. One of the biggest taxpayer concerns—after “how much will my refund be?”—is the risk of making a mistake on a tax return.
It can happen to even the most meticulous filer: after sending off your e-return to the IRS or dropping it in the mail, you notice an error. After the initial flurry of panic, you can relax—your return may technically be out of your hands, but it’s not set in stone just yet.
The IRS has factored in a margin of error for busy taxpayers by providing the Form 1040X. The “X-file” allows you to specify what you reported on your original return, where the error was made, and what the correct figures are. You can even use the form to add or remove dependents or change your filing status. The IRS allows you to file an amendment up to three years after the original filing date.
Below are a few CPA-recommended tips for filing the Form 1040X:
- Indicate the year of the return you’re correcting and include detailed explanations on the back of the form.
- Be sure to include any additional forms or scheduled associated with the change you’re making.
- If you’re amending multiple returns, use a separate form for each year and mail them in separate envelopes.
- Check to make sure your correction doesn’t affect your state taxes; if so, you’ll need to file a separate correction.
- There’s no need to file a Form 1040X if you made a mathematical error on your return; this will be automatically detected and adjusted by the IRS.
Depending on the nature of your error, filing an amended return with the 1040X may work in your favor or could end up costing you. If you neglected to include a source of income in the original return, you’ll probably wind up paying more or receiving less of a refund. But if you’re using the Form 1040X to include an overlooked deductible, you’ll end up reaping some monetary rewards.
Either way, you’re legally bound to correct any errors. It can be tempting to let them slip by, but it’s likely that the IRS will find them sooner or later, and you could face steep interest fees.
There are some additional stipulations and exceptions surrounding tax return amendments. To make sure you cover all your bases, it’s best to consult with your CPA if you discover an error.