Everyone strives hard to ensure that their income tax filing is correct… not only to avoid overpaying or missing out on credits, but also to avoid problems with the IRS. However, errors and omissions can occur for a variety of reasons.
So, what happens when -- despite your best intentions -- your Form 1040 has an error or needs corrected? Don't panic! Here's a quick beginner's guide to fixing the problem.
First, Be Sure of the Changes
The first step to correcting a return is to not panic. Corrections do happen, and they aren't the end of the world. The IRS may even send you a letter detailing the changes they determined on your behalf. If these changes are correct, you often can simply pay the new amount due and move on.
So, first things first -- do the math to make sure that the changes need made and are correct according to your records. If not, you can generally respond in writing to the IRS to prove your case.
Then, Do a New Sample Return
If you determine that you must correct your tax return (with or without an IRS letter), the best way to approach things is to re-figure your taxes entirely on a sample blank form. Make the calculations, figure the credits, and do the math all over again as though you had not ever filed the first return. This sample return will provide the information you need to complete and file the amended return.
Fill Out Form 1040-X
Taxpayers file an amended federal return on Form 1040-X. Form 1040-X contains the original information on a number of lines and the new, revised numbers for those lines.
Follow the instructions provided to copy the numbers on your original tax return for the following categories: Income and Deductions, Tax Liability, Payments, and Refund or Amount You Owe. This original information is entered in Column A of each relevant line.
Next, fill in the corrected amounts for the same categories in Column C, using your prepared sample Form 1040. Once you've entered and verified the numbers in these two columns, fill in the amount of change on each line using simple addition or subtraction.
Fill in Parts I and II only if you are changing something in these two categories. Finally, write down why you are amending your tax return in Part III. Be detailed and attach any backup documents you have before mailing the form to the address listed for your location in the instructions.
Get Help if Needed
Amending a return can be daunting, so if you have to make more than a simple change (such as declaring forgotten income) or you're unsure about any of the adjustments, you may benefit from working with a qualified income tax preparation service or accountant. Even if you prepared the original return yourself, a professional in tax preparation can generally help you amend.