If you've made a mistake on your tax form, don't panic. There are processes and forms to remedy the situation.
The worst thing that can happen with a mistake is interest and fines. Mistakes are mistakes. However, fraudsters can face serious consequences.
Made a mistake? Follow these simple steps after making a tax error.
Recognize Common Tax Errors
Tax errors run the gamut. There are several mistakes one can make on a tax form.
Some of these common tax errors include:
Entering the wrong social security number.
Mathematical errors.
Misinterpretation of tax legislation.
Neglect of income reports.
Receives credits for which the filer is not eligible.
Skip forms or information.
Transposed numbers.
To avoid math errors and typos, have your tax software automatically upload information from your W-2 or other tax forms into the program, or enlist the services of a tax professional.
Make sure you take the time to prepare your taxes. If you need more time or have not received the essential tax forms, you must submit an extension request to enable you to file your taxes (although you must pay before tax day).
How To Correct Errors on Your Tax Form
Your next move will depend on the error's extent and whether you notice it or the IRS notices it.
In many cases, the IRS detects a discrepancy, such as a math error or unreported income, and sends you a notice. If you've worked with a tax preparer, take this notice with you to your tax preparer. Otherwise, check that the letter is correct. Additional charges may apply, in addition to interest, or you may be entitled to an additional refund.
Tax experts recommend paying the taxes owed but allowing the IRS to calculate interest and penalties for you. Uncle Sam may suggest a different number than you'd like to have, and you don't want to pay or pay tax fines. If you overestimate the interest and penalties, it will be a little harder to recover than normal tax payments.
To correct important omissions, correct tax law misinterpretations, seek recently expanded tax benefits, and implement other large-scale changes, taxpayers can complete Form 1040-X, an amended tax return. Fill out this form instead of filing two original tax returns for the same year, which will complicate matters and delay your tax refund.
Remember, correcting a tax form can have a ripple effect. For instance, when you report additional income, it may affect your ability to claim itemized deductions, which must exceed a certain percentage of your adjusted gross income. For complicated tax situations, speak to a tax professional.
What is Form 1040-X?
Form 1040-X is the amended US tax form that is completed after the initial return is filed. It lets you correct several tax documents, including claiming unused tax credits or entering additional information.
According to the IRS, about 3 million of these forms are filled out each year. Previously, the 1040-X was only available in print. Beginning in the summer of 2020, taxpayers can submit Form 1040-X electronically using tax software. It will be available for the amendment of Forms 1040 and 1040-SR 2019.
To register a 1040-X, you will need:
A copy of the original income tax return.
Any communication from the IRS or adjustment of your returns.
Instruction for the return you are modifying.
Support for documentation and tax forms.
The form itself.
To amend a tax return, for example, to claim a tax credit or a refund, you generally have to file the 1040-X within three years of filing the initial tax return or two years after paying your tax, whichever is considered late, according to the IRS.
Early returns are considered deposited on the due date, which is usually April 15. The IRS cautions against completing 1040-X to request a refund of fines or interest (another form covers this).
The form provides space to include an explanation of why you are changing the return. You don't have to write a book to explain this. Keep your answer short; For example, suppose income was accidentally omitted.
Don't Forget the State Income Tax Return.
An error in your federal income tax return can affect your state income tax return. Be sure to investigate the process of correcting a return error. Each state has its arrangements for submitting correct declarations.
Am I Going to be Punished for Errors on My Tax Forms?
Unless you've committed fraud, the IRS won't put you in jail for making a mistake on your tax return.
Taxpayers who make honest mistakes will be asked to correct them and pay the necessary penalties and interest. To remedy complicated situations or audits, consider working with a tax professional to make sure things are done right at this point.
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