How to Correct Tax Filing Mistakes on Your Return

Discovering a mistake on a filed tax return is unsettling, but it is a frequent and correctable occurrence. Errors can range from simple data entry issues to more substantive financial misstatements, like overlooking income or incorrectly claiming a tax benefit. The Internal Revenue Service (IRS) has established clear procedures for taxpayers to rectify these issues, which is a routine part of tax administration.

Common Filing Errors

Mistakes on a tax return can happen in several areas, from basic identification to complex calculations. Being aware of these common pitfalls can help in reviewing a return for potential inaccuracies. Recognizing the specific type of error is the first step toward making a proper correction.

Personal Information Errors

Some of the most frequent errors involve personal data, which can cause processing delays or misdirected refunds. These mistakes include:

• An incorrect Social Security number (SSN) that does not match the Social Security card.
• A misspelled name that does not match the Social Security Administration’s database.
• An outdated or incorrect mailing address, which can lead to missed IRS correspondence.
• Incorrect bank account or routing numbers for direct deposit, which will cause the transaction to be rejected.

If a direct deposit fails due to incorrect bank information, the IRS will mail a paper check to the address on the return, significantly delaying the refund.

Filing Status Errors

Choosing the correct filing status affects the standard deduction amount, tax brackets, and eligibility for certain credits. A common mistake is for an unmarried individual who maintains a home for a qualifying person to file as Single, when they might qualify for the more advantageous Head of Household status. Another issue arises for married couples who must choose between Married Filing Jointly and Married Filing Separately. The IRS provides tools like the Interactive Tax Assistant on its website to help determine the correct status.

Income Reporting Errors

A complete and accurate reporting of all income is a requirement. A frequent oversight is forgetting to include a Form W-2 from a short-term job or omitting income reported on various versions of Form 1099. This can include nonemployee compensation, payments from third-party networks, or investment income. Failing to report such income often triggers an automated notice from the IRS, as the agency receives copies of these same forms from the payers.

Credit and Deduction Errors

Errors related to tax credits and deductions include both omissions and improper claims. A taxpayer might fail to claim a credit they are entitled to, such as the American Opportunity Tax Credit or the Earned Income Tax Credit. Conversely, a taxpayer might incorrectly claim a benefit by claiming a dependent who does not meet all the required tests. Miscalculating the amount of a deduction is another common error that can alter tax liability.

Information Needed to Amend a Return

Once an error has been identified, the next step is to gather the necessary paperwork to make a correction. Assembling all relevant documents before starting ensures the correction is accurate and complete.

Required Documentation

To begin the amendment process, you will need a copy of the original tax return you filed. You must also collect any tax forms that were incorrect or omitted entirely, such as a corrected Form W-2c or a Form 1099. If the correction involves new deductions or credits, you will need the supporting documentation for those claims, such as receipts for charitable donations or a Form 1098-T for education credits.

Understanding Form 1040-X

The document for correcting a previously filed individual income tax return is Form 1040-X, “Amended U.S. Individual Income Tax Return.” This form is used to amend Forms 1040, 1040-SR, and 1040-NR. Use the correct version of the form for the tax year you are amending, which can be downloaded from the IRS website. This form cannot be used to request a refund of penalties and interest, which requires Form 843.

Completing the Form

Form 1040-X features a three-column format on its second page to report the correction. Column A is for the figures from your original return, and Column C is for the correct figures. The form then instructs you to calculate the difference between the columns to arrive at the figures for Column B, “Net change,” which isolates the adjustments.

A part of Form 1040-X is Part III, the section for explanations. Here, you must provide a clear and concise written explanation for each change you are making. For example, you might state, “Received a corrected Form W-2 from my employer, which changed my total wages,” or “Amending to claim the American Opportunity Tax Credit for which I am eligible.”

How to File an Amended Tax Return

After completing Form 1040-X, the next phase involves submitting the return to the IRS. Post-submission, there are specific steps to track the return’s status and manage any resulting tax payment or refund.

Submission Methods

For recent tax years, the IRS permits the electronic filing of amended returns through most tax software programs. If you filed your original return electronically, your software can access that data to help prepare the amendment, and then you can e-file the 1040-X. This is often the most efficient method.

Alternatively, you can file a paper version of Form 1040-X. You must mail the signed form to the IRS service center listed in the form’s instructions for your state. When mailing the form, attach copies of any new or corrected tax documents that substantiate the changes made on the return.

Post-Submission Expectations

Processing an amended return takes longer than an original return, about 8 to 12 weeks, but can extend to 16 weeks or longer. The IRS provides an online tool called “Where’s My Amended Return?” which allows you to track the status of your Form 1040-X starting about three weeks after you file it. If the amendment results in an additional tax liability, pay the amount due as soon as possible to minimize interest and penalties. If the amendment results in a refund, you can request a direct deposit for electronically filed amended returns for tax years 2021 and later; for paper-filed returns, a check will be mailed.

Responding to IRS Notices About Errors

Sometimes, the IRS identifies an error on a tax return before the taxpayer does and sends a notice. It is important to read any correspondence from the IRS carefully and respond in a timely manner, as these are automated communications designed to address specific discrepancies.

Do Not Ignore the Notice

Receiving a letter from the IRS can be intimidating, but ignoring it will only complicate the situation. The notice will explain the issue the IRS has identified and provide instructions on how to respond. A prompt response is necessary to resolve the issue and prevent further actions, such as additional penalties and interest.

Common IRS Notices

The IRS sends various notices for filing errors, with two of the most common being math error notices and the CP2000 notice. A math error notice is issued when the IRS corrects what it believes is a simple arithmetic mistake. The notice will show the IRS’s corrected figures, and if you agree, you may not need to take any action. If you disagree, you have 60 days from the date of the notice to contact the IRS and provide an explanation.

A CP2000 notice is not a bill but a proposal of changes because the income on your return does not match information provided to the IRS by third parties. The notice will detail the proposed adjustments, and you must respond by the deadline, usually 30 days. You can either agree with the changes and pay the proposed amount or disagree and provide supporting documents to prove your original return was correct.