I just discovered I made a stupid mistake. What do I have to do to fix it?
We are human and, no matter how much we double check, mistakes do happen.
As I don’t know what kind of a mistake you made, let me answer the question in general terms.
Typically, when you make a mistake or want to change your return (unless the IRS contacts you first), you file an amended return. If you caught the mistake and make the correction before the return was due, you won’t be charged interest or any penalties. You may have to pay interest or penalties though, if you file the amended return after April 15 (April 17 this year). But if you get a refund because of the change, the IRS generally pays you interest.
Before you begin, decide if you should file an amended return. If you accidentally omitted income, transposed a child’s social security number, checked the wrong filing status, or some other serious error, you definitely want to amend. It’s better to get to the IRS before they get to you. You’ll reduce interest and penalties that way.
Sometimes it’s really not worth it to amend. Perhaps you forgot to deduct the $100 contribution you made to the local volunteer fire department. If your marginal tax rate is 15 percent, ask yourself if filing an amended return is worth an extra $15 refund.
Taxpayers often decide not to amend a return because amending the return will extend the time the IRS gets to audit their returns. This is known as extending the statute of limitations.
Generally speaking, the IRS has until April 15, 2012 to audit 2008 returns. Say that in March 2012, you discover a deduction from 2008. If you decide to amend, the IRS now has until March 2015 (3 years after you file the amended return) to look at that 2008 return a little more closely.
Sometimes tax laws change retroactively, and it’s in the taxpayer’s best interest to go back and amend a prior year’s return. For example, taxpayers whose homes were built with corrosive drywall can go back, amend their returns, and claim a casualty loss. Or, in a few cases, taxpayers are able to back and claim first-time homebuyer credits on prior-year returns.
Regardless of whether you originally filed Form 1040, 1040A, or 1040EZ, start by downloading Form 1040-X and the instructions from the IRS website, www.irs.gov.
Form 1040-X is designed to handle a variety of different mistakes. It’s very important to consult the instructions as to which parts of the form you’ll need to complete. Depending on what changes you are making, there are instructions and detailed charts telling you what should be reported on each line of Form 1040-X. Where you should send the completed return depends on the type of changes and where you live. There’s a chart for that, too.
The IRS sets a goal of 12 weeks to process an amended return. Because of different filing circumstances, that varies greatly and is often longer.
Often, when you amend your federal return, you must also amend your state return. You should amend your federal return before your state return. If the mistake was solely on the state return, you can file just an amended state return. (IL-1040-X in Illinois and Form 1X in Wisconsin) Both of these forms and instructions are available on the state websites.
