Time Frame for Amending Returns

• If you discover an error on your personal income tax return, it is important to correct it as soon as possible. You are required to keep records for seven years so you can correct errors on returns up to seven years old. If the error is in your favor and results in a refund, you only have three years from the date of the tax return or two years from the payment of the taxes for that year, whichever is the later of the two dates. Older refund requests will be denied.
  
  

How to Amend Your Tax Return

• Form 1040-X is the amendment form you will use to correct your tax return. It has three columns: one for the originally reported amounts, one for changes and one for the amended amounts. If you are filing corrections for more than one year, use one 1040-X for each year and clearly write the amended year on top. If the correction involves tax forms, attached them to the amendment before mailing. Consider whether your changes will also affect your state tax returns and file corrected state returns if required.
  
  

The Reassessment Process

• Amended returns must be filed by mail --- they cannot be e-filed. The IRS will review the amendment along with the original return to determine whether the correction is accurate. Amendments go through more manual scrutiny by the IRS than most original returns. The process can take from eight to 12 weeks. When the IRS has made the requested changes, it will send you a notification of amendment. If you are eligible for a refund, the IRS will send you a check or deposit directly into your account. If you owe further taxes, you will receive a bill with the taxes owing plus interest and penalties.
  
  

Interest and Penalties

• If the correction you make to your tax return results in additional taxes owing, you may be charged interest and penalties for late payment unless you pay the additional amount prior to April 15 of the year following the tax return year. For example, if you file in January for the prior year, pay your taxes owing, then find out in March that you made a mistake, there will be no penalties or interest charged if you pay on or before April 15. After that time frame, the IRS may choose to assess them. The IRS has leeway to waive interest and penalties and can use that discretion. Pay the amount assessed on the bill the IRS sends you. It will include interest or penalties.