Finally filing your tax return can take a major weight off your shoulders. It can be very stressful to go over your annual income and try to minimize your tax liability. For most people, once they drop the envelope with their return in the mail or hit the e-file button on their tax preparation software, they won’t have to worry about their income taxes again until the next year.
However, not everyone is that fortunate. When you discover that you made a mistake on your taxes, you have the option of filing new documents to correct the mistake. Should you do so?
If the update causes tax liability, it’s best to correct it yourself rather than wait to be notified of the error. Tax law is complex, and mistakes on filings are common. There’s a reason that the IRS provides straightforward instructions about how to amend a return you’ve already filed.
Obviously, if the mistake means that you overpaid your taxes, you would likely want to correct it to get your money back. For those who make mistakes that will increase how much they have to pay or reduce their refund, they may wonder if they can avoid doing so and incurring those expenses.
Unfortunately, if the IRS finds your mistake before you advise them of it, they may not only ask you for the additional taxes but also apply penalties and interest that could add up to be a substantial amount of money very quickly. Therefore, the sooner you correct a tax mistake and pay any outstanding amount due, the less likely you are to have to deal with future tax problems.