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How to File an Amended Return If You Messed Up Your Taxes

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May. 17 2021, Published 11:21 a.m. ET

For many American taxpayers, an IRS audit is their worst nightmare. Business owners and employees alike have a lot of numbers to report, and mistakes are bound to happen. If you messed up your taxes, you'll have to file an amended return with the IRS.

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However, the circumstances of how to file your amended return depend on what mistakes you made. With the extended tax deadline upon us, fixing your tax filing mistakes should be a priority. 

When to file an amended return

You can actually file an amended return for any of the last three years of tax returns. 

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Usually, the IRS automatically spots and resolves small mistakes on their own. They'll notice if there's a simple mathematical error, and you probably won't have to worry about it. Alternatively, they'll send you a notice with instructions on filing an amended return if they spot a mistake.

This isn't always the case, so it's best to stay on top of things so you don't wind up with a belated tax bill.

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The most common tax filing mistakes include:

  • Forgetting to report a deduction or credit, which could reduce your owed taxes or increase your tax return (the new eligibility requirements for the child tax credit or the earned income tax credit might trip some people up)
  • Miscalculating math, which could mean putting a decimal point in the wrong place or adding numbers incorrectly (this is more common with original paper returns)
  • Forgetting to report additional income, like an independent contractor side gig in which you earned $400 or more for the year (anything under $400 annually is considered a hobby and doesn't need to be reported)
  • You lied on your initial tax return and would like to amend the error (you will probably get penalized for this with a fee, but it's better to come forward instead of facing an audit down the line)

You can sometimes file an amended return electronically.

The IRS used to require that all amended tax returns go through snail mail, but this isn't the case anymore. Since 2019 or 2020, Form 1040 or 1040-SR amendments can be filed electronically through certain tax software.

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Any other circumstances require you to go through the mail. You can only file up to three amended returns, so try your best to resolve all of the errors in one round. If you can afford it, enlisting the help of a CPA (certified public accountant) is your best bet. 

You won't always face a penalty, but be ready for one in certain scenarios.

If you forgot to report income on your tax return, then you've technically missed the deadline for paying income taxes. Even if you're filing an amended return or getting a tax-filing extension, all income tax must be paid by the deadline.

In this case, you'll face a late filing penalty as well as any interest on the outstanding balance. For 2021, IRS interest rates are 3 percent for underpayments and 5 percent for large corporate underpayments (in addition to the federal short-term interest rate).

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