This year’s tax season has come to a close — unless you live in California, in which case you’ve been granted an automatic 6 month extension due to fires and floods. Of course, there’s nothing worse than finishing your taxes and second-guessing what you submitted.
If you have made a mistake on your tax return, you can amend it to correct the error. The IRS will accept amended returns for up to three years after the original filing date.
There are many reasons why you might need to amend your tax return. For example, you may have:
- Forgot to report income
- This can happen if you receive income from a source that is not reported to the IRS, such as a side hustle or rental property.
- Overpaid your taxes
- More common than you’d think. This can happen if you have too many deductions or credits, or if you made a mistake in your math.
- Claimed a deduction or credit that you were not eligible fo
- This can happen if you do not meet the requirements for the deduction or credit, or if you make a mistake in calculating the amount of the deduction or credit.
If you are unsure whether you need to amend your tax return, you should consult with a tax professional.
How to Amend Your Tax Return
To amend your tax return, you will need to file Form 1040X; the Amended U.S. Individual Income Tax Return. You can download the form from the IRS website and even request a paper copy by calling 800-829-1040.
When you file Form 1040X, you will need to:
- Complete the form in its entirety;
- Explain the error you made and the amount of change you are requesting;
- Attach any supporting documentation, such as W-2 forms or receipts.
If you are amending your return to claim a refund, you will need to pay any interest and penalties that are due. You can pay these amounts online, by mail, or by phone.
The IRS will process your amended return within six weeks. If you have any questions, you can contact the IRS at 800-829-1040.
What Happens If You Don’t Amend Your Tax Return
If you do not amend your tax return to correct an error, you may be subject to penalties and interest. The amount of the penalty will depend on the severity of the error and the amount of time that has passed since the error was made.
In addition, if you file an amended return and it results in a larger refund, you may have to pay interest on the refund for the period of time that you were owed the money.
Amending Taxes in Washington State
Here are some things specific to Washington State that you should be aware of when amending your tax return:
- The Washington State Department of Revenue (DOR) will only accept amended returns for up to four years after the original filing date.
- If you are amending your return to claim a refund, you may be eligible for interest on the refund. The amount of interest will depend on the length of time that the refund was delayed.
- If you are amending your return to pay additional taxes, you may be able to pay the additional taxes in installments.
- The DOR has a number of resources available to help you amend your tax return, including a website, a toll-free number, and a walk-in center.
Should I File an Extension or Offer In Compromise?
The short answer is “No” as there are different circumstances for each. Here are the key differences between amending a tax return and submitting an offer in compromise:
- Purpose: An amended tax return is filed to correct an error on a previously filed tax return. An Offer in Compromise is filed to settle a tax debt for less than the full amount owed.
- Timing: An amended tax return can be filed at any time, but it is generally best to file it as soon as possible after the error is discovered. An Offer in Compromise must be filed before the IRS files a Notice of Levy or a Notice of Intent to Levy.
- Process: To amend a tax return, you must file Form 1040X, Amended U.S. Individual Income Tax Return. To submit an Offer in Compromise, you must file Form 656, Offer in Compromise.
- Requirements: There are no specific requirements for amending a tax return. However, there are a number of factors that the IRS will consider when evaluating an Offer in Compromise, including your ability to pay, your income, and your assets.
- Outcome: If your amended tax return is accepted, the IRS will recalculate your tax liability and you may be eligible for a refund. If your Offer in Compromise is accepted, the IRS will agree to settle your tax debt for less than the full amount owed.
For a full breakdown of whether or not to file an extension, amend a return or submit an offer in compromise, here’s a table breakdown:
| Option | Purpose | Timing | Process | Requirements | Outcome |
|---|---|---|---|---|---|
| Amended tax return | Correct an error on a previously filed tax return | Any time, but generally best to file as soon as possible | File Form 1040X, Amended U.S. Individual Income Tax Return | No specific requirements | The IRS will recalculate your tax liability and you may be eligible for a refund. |
| Extension | Request more time to file your tax return | Before the original due date | File Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return | None | You will have until the extended due date to file your tax return. |
| Offer in compromise | Settle your tax debt for less than the full amount owed | Before the IRS files a Notice of Levy or a Notice of Intent to Levy | File Form 656, Offer in Compromise | The IRS will consider your ability to pay, your income, and your assets when evaluating your offer | If your offer is accepted, the IRS will agree to settle your tax debt for less than the full amount owed. |
Conclusion
If you have made a mistake on your tax return, you should amend it as quickly as possible to correct the error. By following the steps in this guide, you can amend your tax return correctly and avoid any penalties.