When you file your tax return, both you and the professional you hire to prepare the return have to sign the document certifying that it is correct to the best of your knowledge. However, mistakes do happen.
Whether you filled out your tax paperwork on your own or hired someone else to do it, you might have forgotten about the sale of some stocks or a short-lived position as an independent contractor with a company.
When you receive a belated tax form from an employer or records from a sale, you may realize that you have made a mistake while preparing your tax return. Can you update, correct or modify your tax return?
Yes, the IRS allows you to file a corrected return
Once you realize that you have made a significant mistake or omission on your tax return, you should set about correcting that issue as soon as possible. A 1040X is the standard IRS paperwork for submitting a modification or revision to your existing tax return.
If you owe taxes, you will want to send any unpaid balance along with your 1040X right away to minimize what penalties or interest you have to pay on that amount. If you may now receive a refund, patience may be necessary.
Generally, you can amend a return within three years of filing it and expect the IRS to update your tax or refund amounts accordingly. Those dealing with income tax issues may be at higher risk than others of audits and allegations of tax fraud. Learning about how to correct income tax return mistakes can help you avoid more serious tax consequences.