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This article has been updated for the 2018 tax year.
Did you make a mistake on your federal income tax return but didn’t catch it until after you filed?
Maybe an important tax document arrived in the mail days after you e-filed your return. Don’t worry, you’re not in trouble — as long as you file an amended tax return to correct the error.
Filing an amended tax return gives you the chance to correct tax forms you’ve already filed, even if the mistake or omission is on an old return. Here’s what you need to know about how to file an amended tax return.
Do you need to file an amended tax return?
If you’ve discovered an error on tax forms submitted to the IRS, your first step is to figure out whether the mistake is one the IRS will correct for you or if you need to act.
“The purpose of an amended return is to correct an error on the original return, or to include additional information not previously reported,” says Cindy Hockenberry, director of Tax Research and Government Relations at the National Association of Tax Professionals, in Appleton, Wisconsin.
This doesn’t mean you need to notify the IRS of every little error or omission. If you simply forgot a form or made a basic math error, the IRS will either correct it for you or send out a request for missing info.
You do, however, need to notify the IRS right away if the error is a big one that affects your tax obligation. Examples of mistakes that should prompt you to submit an amended return include any of the following:
- Submitting taxes with the incorrect filing status
- Misreporting your income
- Claiming the wrong number of dependents
- Forgetting to claim credits or tax deductions
You may also need to file an amended return if you receive revised information after submitting your taxes.
“For those who receive 1099s from investment accounts, I recommend waiting at least a couple of weeks after the tax filing season opens to see if your brokerage company issues corrected 1099s,” advises ReKeithen Miller, a certified financial planner and enrolled agent with Palisades Hudson Financial Group in Atlanta. “Mutual fund companies may reclassify income reported to brokerage companies, which can change the tax treatment of the information.”
Here’s how to file an amended tax return
If you need to file an amended return, you’ll probably use form 1040X. This form allows you to correct errors on IRS Forms 1040, 1040A, 1040EZ, 1040NR or 1040NR EZ. Credit Karma Tax®, a free online tax preparation service, supports Form 1040X. The form includes three columns to complete:
- Column A provides space for amounts from your original return or a prior amended return.
- Column B is the difference between Column A and Column C and shows the net increase or decrease for each line you change.
- Column C is where you input corrected amounts.
You’ll use the back of the 1040X form to explain your changes. And if other schedules or forms change, include those with your 1040X form when you submit it to the IRS along with any new forms you received after you originally filed, like W-2s or 1099s.
Once you’re done filling out your 1040X, you’ll have to print and mail it since it can’t be submitted online. Before you do, take the time to ensure it’s correct so that you don’t have to amend again. You can find mailing addresses for amended returns on page 14 of the instructions for the 1040X. You’ll need to choose the address that applies to your tax situation.
“Once you file an amendment, it can’t be cancelled,” says Priya Mishra, an attorney and director of operations at Top Tax Defenders, a tax resolution firm based in Houston. “However, you can amend the amendment. You would just have to fill out another 1040X form after the original amendment was processed.”
When should you submit your amended tax return?
If your amended forms will result in a larger refund, the IRS recommends waiting to submit the 1040X until you’ve received the refund from your original return. However, if you’ll owe taxes based on your amended return, send in your 1040X and pay the taxes as soon as possible to limit penalties and interest due on late tax payments.
While you should submit amendments in a timely manner, you may have a long time before it’s too late to correct mistakes. The time limit for credits and refunds can be suspended for those who are mentally or physically unable to manage their own finances as outlined in IRS Publication 556, in the “Periods of financial disability” section.
“Generally, you have three years from the date the return was originally filed to file an amendment,” says Micah Fraim, a CPA in Roanoke, Virginia. “After three years, the IRS typically will not accept an amended return.”
The IRS will accept an amended return no more than two years after the date you paid the tax, if that time frame would extend your amendment deadline longer than three years from the date you filed your original return.
Priya Mishra, Top Tax Defenders
If you filed your original return early, your return is considered filed on the due date (generally April 15). If you were granted an extension of time to file and mailed your return in prior to the October extension deadline, the IRS uses the date they received the return rather than the extension filing deadline.
There are other situations with different deadlines for amending your return. You’ll find that information in the “When To File” and “Special Situations” section of the 1040X instructions each year. So if you think you may have missed the deadline, be sure to check if there are any special dispensations for your situation.
What happens after you admit your error?
Admitting mistakes to the IRS won’t cost you anything. But if your mistake means you owe more taxes than you originally thought you would — or more than you paid — you’ll have to pay that amount. Plus you could face interest charges and penalties for paying that additional tax late.
“There are no penalties for amending a return, but there can be penalties if there are amounts due on the amended return,” says Professor Dewey Martin, CPA and the director of the School of Accounting at Husson University in Bangor, Maine. “These are ‘late payment’ penalties because the dollars owed should have been paid by the original due date of the return.”
Calculating late payment penalties can be tricky.
“If a balance is owed, then the penalties vary based on how much is owed and how much time has passed since the return was originally filed,” Fraim says. “For minor cases, the IRS may simply charge interest and a ‘failure to pay’ penalty. For larger mistakes, they might also impose an accuracy-related penalty.”
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If you filed a claim for a refund or credit for more than you should have, the IRS may impose a penalty of 20 percent of the amount in error. You might be able to avoid the penalty if you can show you had reasonable cause for the claim that resulted in the overpayment.
You could also face a steeper penalty of $5,000 if the IRS deems your return was frivolous. A frivolous return is one that doesn’t include information required to accurately calculate your tax, or shows a substantially incorrect tax because you took a frivolous position or filed an incorrect return to intentionally delay or interfere with tax laws. The IRS can also impose other penalties if you substantially understated your tax obligation, were negligent in your filing or filed an incorrect return to commit fraud.
The failure to pay penalty is “usually one-half of 1 percent of the unpaid amount for each month or part of a month the tax isn’t paid,” Hockenberry says.
Plus interest on unpaid taxes will begin accruing from the date the taxes were due, even if you had an extension of time to file.
There is some good news, though, if your amended return results in a bigger refund.
“While there can be interest you owe the IRS on an unpaid balance, there can also be interest earned and paid to you if you’re entitled to a refund,” Martin says.
What happens if you don’t admit your error?
Filing extra forms and paying extra taxes probably doesn’t sound like your idea of a good time, but taking action is often better than the alternative — waiting for the IRS to figure out your mistake on their own.
“The IRS’s system automatically checks what was reported on an individual’s tax return to what was reported by others,” Fraim explains. “Because of this, many disparities will automatically be detected, and the IRS will send out a Notice CP2000 — usually about a year later.”
If you’re notified of an additional refund coming, this isn’t a big deal. But if you owe money to the IRS, you could have problems.
“If you discovered an error on the original return and you don’t correct it before the IRS catches it, chances are you will pay more interest on the tax due,” Hockenberry says.
This added interest will accrue during the time it takes for the IRS to find the problem. And this isn’t the worst-case scenario either.
ReKeithen Miller, Palisades Hudson Financial Group
“You could give the IRS a slam dunk case of tax evasion against you,” warns Anthony Parent, founding partner of IRS Medic, Parent & Parent LLC, a Wallingford, Connecticut, tax law firm.
If the IRS claims you intentionally evaded your obligations, consequences become much more serious — but this isn’t very common.
If you’ve discovered you clearly understated your income, amending your return is important both to keep your interest and penalties as low as possible and to reduce the chances that the IRS will accuse you of intentional wrongdoing (assuming none has been committed).
“I always find that the tax authorities are much more forgiving when you comply voluntarily instead of them having to chase you down to comply with your tax obligation,” Miller says.
How long will it take the IRS to process the amended return?
Once you‘ve submitted your amended return, settle in for a long wait.
“Amended returns can take up to 16 weeks to process,” Fraim says.
And if your return is from prior years, you likely won’t hear anything for the full duration, the experts say.
“The general rule: The older the amendment, the longer it can take to process,” Parent adds.
This delay may seem excessive, but there’s a reason it takes so long.
“Amended returns are typically reviewed by an IRS employee, especially if a refund is due to the taxpayer,” Miller says. “Due to the labor-intensive nature of this process and the low staffing levels at the IRS, it can take a long time for the IRS to process an amended return.”
The good news is, if you’re eager to see where your return is, there are ways to track it.
“You can call the IRS or check their Where’s My Amended Return? Tool,” Fraim says.
However, allow up to three weeks from the time you mail your amended return for it to show up in the tool.
Now that you know how to file an amended tax return and why you should do it, you can take action. If you’re going to owe money after amending your return, acting quickly could help reduce any penalties or interest. And if Uncle Sam will owe you, filing your amended return promptly could put that money in your pocket as soon as possible.