Oops. You’ve just discovered an error on or an omission of an item on your most recently filed federal income tax return. Now what? Should you ignore the mistake? While it could depend on the nature of the error and how significant it is, the answer is generally “no”. You can rectify the matter by filing an amended income tax return for the year in question.
If you discover a significant error, you will certainly need to file Form 1040X, Amended U.S. Individual Income Tax Return. This form is for correcting information on the return as it was originally filed. This form also can be used to make other changes to your originally filed return. It may be used to change your filing status, or claim additional deductions you may have missed by itemizing them instead of taking the standard deduction. You may also have overlooked the earned income credit, or even forgotten to include a dependent on your original return. Perhaps you received a “corrected” brokerage statement or Form K-1 long after you filed your return.
Why should you bother filing a Form 1040X? If the IRS owes you money, you’ll want to file this form in order to receive your additional refund. Even if you owe money to the IRS, it is wise to file Form 1040X rather than waiting for the IRS to catch the error – which is likely to happen eventually. By being proactive, you’ll avoid some potentially stiff penalties and interest charges. However, timing is critical. You have three years (including extensions) from the original due date of the return to file an amended return. If you didn’t pay your taxes in full when you submitted your return, you only have two years from the date you finally paid your tax bill to make the corrections. If you think you need to file an amended return, it is a good idea to consult your tax professional.