Saturday, March 6, 2010
Have you ever had a reason to update or amend one of your previous tax returns? Well I have and fortunately it was a mistake that brought more of my money back into my pocket! The procedure was pretty easy and although the Internal Revenue Service allows itself 8-12 weeks to process amended returns, I received a check in 3-4 weeks even though I was getting money back.
But before we get into the process, let's answer your question; "What should I do if I made a mistake on a previous return?" As you might expect, the answer, like most when it comes to the IRS is, it depends on the type of mistake that you made. If it was simply a math error, many of those are caught in the processing of the tax return itself. If you did not attach a required schedule, this will also be caught by the IRS and they will contact you requesting the missing information. So for these two types of errors, according the IRS, don't sweat it! Feel better already, don't you? There are two situations in which you should file an amended return using Form 1040X: 1) you did no report all your income and 2) you missed claiming a credit for which you were eligible.
Here's how this works. Using Form 1040X, you fill in the Correct Amount and Correct Number or Amount as the entries you would have made on your original return had it been completed correctly. These entries will in effect change your original return to include the updated data. The IRS has found that figuring the entries for Form 1040X is best when done in the margin of your original form and then transferred to the 1040X for resubmission.
If you are going to file an amended or corrected return, make sure that you include copies of any schedules that have been changed or any form that you may have originally excluded. It's also important to remember that to claim and receive a refund, the IRS must receive a Form 1040X within three years after the date you filed your original return or within two years after the date you paid the tax, whichever is later.
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