Individual tax returns or extensions were due about three weeks ago. Yet, many filers likely discovered that they made a mistake by unintentionally under-reporting income or expenses. It could be that they just received a 1099 that was supposed to be sent to them in February. It happens as nearly 6 million filers amend returns each year. Still, the taxpayer needs to correct it, even if that means ultimately having to pay more tax and amending their federal and state tax returns. So, what are the chances of being audited now that you have to amend your tax return?
What if my return hasn’t been processed yet?
If you e-filed your return using a software program like Turbo Tax, and the return is still pending, you should wait to see what happens next. If it’s rejected for some reason, you can make the changes to your return as well as address the reasons for the rejection. In some cases you can resubmit the return electronically; in other cases you need to print it out and submit a paper copy.
What if my return was already processed?
If your return has been processed, you’ll need to file a 1040X, Amended U.S. Individual Income Tax Return, as well as a state tax return. For federal tax returns you must file the amended return within three years of the date you filed your original return, or within two years of the date you paid tax. If you owed additional tax you need to pay the tax as soon as possible to avoid penalties and interest. If you are due a refund, wait until you receive the tax refund before filing an amended return.
Do I really need to file an amended tax return?
It depends on the situation. If the mistake was a math error or you accidentally left out a schedule that doesn’t change the amount of taxes you owe, then do not file an amended tax return. The IRS may send you a letter to verify certain information and request supporting documentation but that is about it. But, if you need to change your filing status, income, deductions or credits that will impact your tax liability, then you should complete an amended tax return. Failure to do so can result in the IRS reviewing your entire tax return in detail and assessing some hefty penalties.
Does filing an amended tax return increase my chances of an audit?
Technically, the answer is no but the return will be hand processed and reviewed by more agents and compared to the original return. Remember, the average Joe and Jane Taxpayer earning less than $200,000 a year, only has about a 1 percent chance of being audited.
Don’t expect your amended return to be processed in record time
Most Forms 1040X will take at least two to three months to be processed from the time the IRS receives the form. State tax returns may take longer.
More Tax Questions? Browse answers or ask you amending tax return questions online
->Does Filing an Extension Increase My Chances of Being Audited?
->What Steps Should I Take to Fix an Incorrect Tax Refund?
->Why Is My Tax Refund So Much Lower This Year?
->Which Tax Records Do I Need to Keep on File?
->There Is an Error on My Tax Return