You forgot to declare the money you earned from your side gig on your annual tax return. This could be an honest mistake, of course. But what will happen next? Will the IRS come after you?
Fortunately, the government knows that to err is only human, especially when filing your taxes. That's why the IRS allows taxpayers to make any changes to their tax returns by submitting an amendment.
This article will discuss amending your tax returns as well as when and how you should do it.
An amended tax return is an official way to make any changes on your tax returns after you've already filed them. Changes can be made for several reasons, but it's often due to incorrectly declaring income sources in the original filing.
If the changes caused you to underpay your taxes, you would need to make an additional payment to the IRS. If you overpaid, the IRS would refund you the difference.
Note that you can't amend taxes indefinitely. You need to submit an amendment, either no more than three years from the original filing date of the tax return or within two years of paying your tax returns for that year. Once these time limits have passed, you won't be eligible for refunds anymore.
Many taxpayers wonder when to amend tax return filings. For the most part, you may file because of an error or omission on your income or tax deduction. You might have income from a side gig or dividends from an investment that you honestly forgot or didn't know you needed to declare. In some cases, your employer might have been the one who made a mistake on your W-2 form.
However, amending tax returns could also be due to a change in circumstances after you've made the filing. This situation often happens if you decide to file early.
Here's an example: Suppose you have a child currently attending college. They file their taxes before you file yours; however, they chose to file as an independent. Since your child claimed themselves to be an independent, you cannot file a tax return claiming them as a dependent. However, if your child files an amended tax return to change their status, you would be able to claim that child as a dependent.
You would also need to amend if you mistakenly filed a tax return as a single taxpayer when you're actually married. This situation can happen if you tied the knot late in the year (say December) and assumed you and your spouse would need to file separate returns since you were single for most of the year. The IRS considers your status as married as long as you were wed on or before December 31 of that tax year.
Thankfully, amending your taxes is a fairly straightforward process. The first step is to obtain a copy of your original tax return and prepare any supporting documents. If you're amending due to an unreported income, you need to attach a new W-2 or 1099 Form showing the changes. If you want to declare a tax-deductible expense, you must show proof of that claim.
Next, secure and fill out Form 1040-X, the IRS form used for amending tax return filings. Depending on your amendments, you might also need to secure additional forms from the IRS.
Lastly, submit Form 1040-X and other supporting documents to the IRS. For tax years 2018 and prior, you need to mail them physically. For tax years 2019 and beyond, you can conveniently send the documents digitally.
The IRS usually takes eight to twelve weeks to process your amendment.
How much does it cost to amend a tax return? Filing the amendment itself is free. However, if your amendment results in additional payment, you must settle the difference either by mailing a check or sending payment digitally to the IRS.
Amending tax return filings can be uncomplicated, but it can also be tedious. If you're unsure how to do so or have any questions, contact the expert Chicago tax accountants at Porte Brown. We'll help you file your returns and amendments as error-free as possible.
Get in touch today and find out how we can help you meet your objectives.
