We can all be relieved that tax season is over. However, what if it dawns on you that you made a mistake? Don't panic just yet. I asked Meredith Johnson, CPA, CFP of Burr Pilger Mayer for her input, and below is a summary of her expert advice.
According to Meredith, "There are a number of reasons why a return might need to be corrected. Perhaps you received a corrected 1099 or W-2. Maybe you didn't realize that you were eligible for education credits, or you simply made a math error. The important thing is that you contact the IRS before they contact you, especially if the correction means that you will owe additional tax."
To correct the error, you need to file an amended return, called a 1040X. The first page looks like a table, where you indicate the following: 1. amounts shown on your original return 2. the amount of the change and 3. the correct amount. The second page has a place for you to write a brief summary regarding why you are amending the return. Then you'll attach a corrected return, with "Amended" written at the top, to the back of the 1040X. If the change results in additional tax due, enclose a check or money order for the amount you have calculated that you owe. Be sure you send it trackable...just in case.
Turbotax also addresses the process of correcting a mistake and amending your tax return. They emphasize that you don't have to redo the entire return. They go on to say that you, "Just show the necessary changes and adjust your tax liability accordingly." Also, you cannot file the amendment electronically.
Once you file it you'll have to be patient. It takes 8-12 weeks for a 1040X to be processed. This year the IRS offers a new online tool called, "Where's my Amended Return." It allows you to check on the processing status. So, even though you can't file electronically you can track it online.
Be sure to put some checks and balances in place, so that if this mistake was avoidable you don't repeat it again next year. This might include: establishing a more effective organizational system for your tax information, like an accordion folder for receipt categories or using a program like Quickbooks. Also, calendar a tax planning meeting in October so you're considering tax legislation and making decisions well before the year-end deadline. As I've mentioned before, everyone's tax situation is different. If you think this information might apply to you don't hesitate to reach out to a qualified tax professional for help. Taxes can be complex and filing your taxes correctly will put you in better financial standing and help you SaveUp!
This post was written by SaveUp's personal finance contributing writer, Catherine Hawley, CFP.
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