Amended Tax Returns & Legal Concerns

Some taxpayers panic when they discover that they made a mistake on a tax return that they already filed. This might involve forgetting to report a certain income source, wrongly claiming a deduction that did not apply, or failing to claim a deduction that did apply, among other examples. However, a taxpayer in this situation generally does not need to worry if they made an innocent mistake. You can file an amended tax return within three years after filing an inaccurate return. This can shield you from most or all of the interest and penalties that the IRS might require you to pay if they audit your inaccurate return and find the mistake. If an audit is already underway, however, you should not amend your return at that point. You should simply tell the agent conducting the audit about the mistake and explain why it happened.

You do not need to file an amended return if you made a mistake in your math. The IRS will automatically correct those mistakes and notify a taxpayer about any adjustments.

Amending a Return

You will need to submit Form 1040X if you want to amend your return. You should make sure to collect documents that support the basis for the amendment. On Form 1040X, you should explain why you are submitting an amended return. Sometimes the reason for amending a return was outside the control of the taxpayer. Their filing status might have changed based on changes in their household, or their employer might have provided them with a new W-2 form after they submitted the initial tax return.

Amended Returns and Risk of Audits

Conventional wisdom in the industry has held that filing an amended tax return makes you more likely to be audited. This can discourage taxpayers from amending a return, even if they know that they made a mistake, and even if that mistake is costing them money rather than the government. You should not make this assumption, though. The IRS has formally stated that audits do not automatically follow an amended tax return. If the amended return results in a significant change in your favor, and the circumstances surrounding the change seem suspicious, the IRS likely will start an audit.

You may face a greater risk of an audit if you claim that the government should pay you, such as when you are claiming a tax credit that exceeds your tax obligation. However, this is true for original returns as well as amended returns.

Last reviewed October 2024