Need to fix a tax mistake?

April 16, 2014, 1:07 PM ET

By Jonnelle Marte

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Botch something on your tax return?
Tax professionals say it’s best to come clean about a tax mistake as soon as you catch it, but the exact process for doing so will depend on the magnitude of the blunder. Not everything requires filing an amended return by using Form 1040X.
Certain mistakes, like math errors, can be automatically corrected by the IRS, which also receives copies of W-2 forms, 1099s and other statements that can help the agency double check the math on your return. Taxpayers also shouldn’t stress if they forgot to attach certain forms such as a W-2 form or a schedule. If it’s important, the IRS will send you a letter asking for it.
You should, however, file an amended return if you realize that you forgot to report some of your income, says David R. Baldwin, an accountant in Phoenix with Baldwin & Baldwin PLLC. That may include reporting any statements that may have been corrected by a brokerage firm or that may have been lost in the shuffle. Since the IRS gets copies of those income documents, it may notice the underreported income and charge interest and penalty charges for any taxes due. “I’ve seen the IRS issue a notice for an underpayment of as little as a few hundred dollars,” says Baldwin.
Some taxpayers may realize they neglected to claim a deduction they didn’t know they qualified for, or they might have claimed a deduction that they didn’t deserve, and those mistakes should be corrected through an amended return — especially if the change will substantially impact the amount of taxes owed, says Baldwin.
If your amended return will result in a refund, the IRS says you should wait to receive your first refund check before you file the amended return. But if you are going to owe, you should pay the bill as soon as possible to minimize interest and penalty charges.
Taxpayers generally have three years from the date a return was due to file a Form 1040X. (That means the deadline for amending a 2013 return is April 15, 2017.) Unlike regular tax returns, amended returns must be filed by mail. And if you caught a mistake for multiple years, the IRS requires that each amended return be filed in a separate envelope.
Amended returns can take up to 16 weeks to process, and taxpayers can check the status of their returns using the “Where’s My Amended Return?” tool offered online by the IRS. (It will take up to three weeks from the date a return is mailed for it to show up in the system.) Don’t forget to check with your state, since a change to your federal tax bill might also impact how much you owe your state.