April 15 is now in the past. Everyone can breathe a collective sigh of relief. In fact, for those people who have received their refund they might already be enjoying the fruits of that extra influx of cash. For those still waiting for their refunds to arrive, big plans could be in the works for that extra money. Either way, most people who have finished their return and filed it with the IRS are simply glad that the ordeal is over for another year. However, unfortunately, not everyone is in this boat. There are many people who have filed for an extension and still others who have just plain missed the deadline. Lastly, there is the group of taxpayers that have discovered that they made a mistake in their return. For those people the big question now is: “should I file an amended return?” The answer depends on several things.
The first thing you need to consider is whether or not your mistake is serious enough to warrant an amended return. For example, if you discover that you simply made some math errors then you probably don’t need to file an amendment. The IRS will catch math errors and advise you if your refund, or your amount of tax liability, has been affected. Additionally, if you forgot to sign your return, or you didn’t attach the right forms then in most cases, the IRS will simply ask for that documentation if it needs it in order to proceed with your return. In most cases, if your return was filled out correctly as far as you know, then you most likely don’t need to file an amended return.
On the other hand, if you have discovered some big mistakes on your return then you should file an amendment. For example, if you failed to report income from a Form 1099 or you received one after you filed your return, then according to the IRS, you should file and amendment. While you do not have to file an amended return, it is often the best idea when dealing with the IRS. Also, it’s important to note that when you file an amendment, you can’t just make adjustments that are in your favor. You need to make all the necessary corrections even if they decrease your refund amount or increase your tax liability. In other words, you can’t pick and choose what to correct and what not to correct.
Another important thing to keep in mind is that you do not have to file an amended return right away. You actually have up to three years from the filing date of your original return to file an amended return, or within two years after you actually paid the tax, which is determined by whichever event occurred last. One advantage of waiting to file an amended return is that it can help protect from an audit. Generally, the IRS has three years to audit a return. However, when someone files an amended return, the IRS does not get extra time to perform an audit. Therefore, if you wait till your amendment deadline is close then the IRS will have a very limited amount of time to audit the amended return.
There is one downside to also be aware of. Just because you file an amended return, that does not give you an extension to pay your tax bill. You will still be responsible to pay any tax liability on time. That means if you owe money and are late paying the bill, you will be assessed late fees as well as any interest the IRS has lost. It also means that if the amended return increases your tax bill, you could owe late fees and interest on the underpaid amount. Therefore, if you owe money, you need to pay it off as soon as possible. In the event that the amended return decreases your tax liability, then the IRS will reimburse you the overpayment.
So, if your mistake is small, then you probably don’t need to file an amended return. On the other hand, if you made a big gaffe, then filing an amendment is probably in your best interest. However, the best time to do that is up to you.
This post was published on May 11, 2015