Spring is almost here, which means the deadline to file your tax return is quickly approaching. Now is the time to start gathering the appropriate documents you will need in order to file your taxes.
However, things can sometimes get missed. As hard as you might try to make sure everything is correct, mistakes can still happen. So, what are the consequences for an error on your tax return? Will you be fined? Will there be an audit? Will you serve jail time?
Luckily, there is still hope if you discover an error. Consider the following ways to correct your tax return in order to avoid penalties.
File an amended tax return
An amended tax return is an additional return that you file with the Internal Revenue Service (IRS) to notify them of any corrections you need to make on a previous tax return. These returns allow you to correct changes if you omitted taxable income or if you want to claim a refund.
If you forgot to report income or discover a similar error, you should file an amended tax return as soon as possible. It is important to explain the mistake on your original return and pay any difference you owe. Generally, the form used to file an amended tax return is Form 1040X.
Amended tax returns can also be used if you are looking to claim a refund or failed to report the correct tax credits. For these types of mistakes, you have up to two years after the date you file or 36 months after the original deadline to file a return. Unlike normal tax returns, you cannot submit an amended return electronically. Generally, it takes around 4 months to receive your refund.
The IRS has three years to discover errors on your previously filed tax returns, and up to six years if you failed to report more than 25 percent of your income. Instead of waiting years for the IRS to notice a mistake on your tax return, file an amended return as soon as you notice an error. It can be beneficial to consult with an experienced tax attorney if you have any questions.