What to Do When You Make a Mistake on Your Taxes

To file an amended tax return, you can follow these four common steps:

1. Gather all relevant documents. This includes your original tax return and any new information that supports the changes you wish to make.

2. Complete Form 1040-X. Once you have everything in order, complete Form 1040-X, ensuring that you clearly explain the reasons for the amendments. It’s crucial to be thorough and accurate, as incomplete or incorrect information can lead to further complications.

3. Submit the form. After completing the form, you can submit it either electronically or by mail, depending on the tax year you are amending. Keep in mind that the IRS typically allows you to amend returns for up to three years from the original filing date or two years from the date you paid the tax, whichever is later.

4. Await processing. After submitting your amended return, it can take up to 16 weeks for the IRS to process it (and, depending on staffing changes, it could take even longer). During this period, you can track the status of your amendment using the “Where’s My Amended Return?” tool on the IRS website.

Timing is essential when amending your tax return. If you’re expecting a refund from your original return, wait until you receive it before filing an amended return. This ensures that the process is not delayed.

Additionally, in some cases, correcting a mistake might result in a refund. If you overpaid due to an error, filing an amended return can help you claim this money back. Be sure to check the IRS guidelines on refund claims to ensure you meet any deadlines.

Making tax mistakes can lead to significant financial consequences that could disrupt your financial stability.

Errors on your tax return, such as incorrect calculations or missing information, can result in penalties and interest charges from the IRS. These additional costs can quickly add up, especially if the mistake goes unnoticed for an extended period. Moreover, if the IRS determines that your error was due to negligence or fraud, the penalties can be even more severe, potentially reaching up to 75% of the underpaid tax amount.

Tax mistakes can also have a long-term impact on your financial planning. An error that results in an unexpected tax bill can strain your budget and force you to dip into savings or investments to cover the cost. This can derail your financial goals, such as saving for retirement or purchasing a home.

Beyond immediate financial implications, tax mistakes can damage your financial reputation. Consistent errors or discrepancies in your tax filings can raise red flags with the IRS, potentially leading to increased scrutiny in future tax years.

Tax mistakes are not uncommon but it’s important to act promptly to minimize any potential repercussions. First, review your tax return thoroughly to identify and understand the error. This will help to determine the corrective action you need to take. If the mistake is minor, such as a simple math error, the IRS often corrects it automatically. However, for more significant errors, such as incorrect income reporting or missed deductions, filing an amended return using Form 1040-X is necessary.

• A financial advisor can recommend tax strategies to reduce your liability and maximize financial efficiency. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• SmartAsset’s tax return calculator with updated brackets and rates to see how your income, withholdings, deductions and credits will affect your next refund or balance due.

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