If you suddenly discover a mistake on the income-tax return you just filed, don’t panic. You can correct it. And you’re probably better off correcting it yourself rather than waiting to see if the IRS discovers the error.
Hot to Fix the Mistake
The IRS has a special form you can use to correct mistakes — Form 1040X, in the case of a individual tax return. You list the amount you originally reported in the first column of the form, changes in the numbers in the second column, and the corrected figures in the third. Write an explanation of your changes in Part III of the form.
You then have to attach to Form 1040X the forms and schedules of your income tax return that were affected by the error, both as originally filed and as amended.
If the error is the result of a corrected W-2 or 1099, attach a copy of that form to your return. And if the error is due to a missed deduction, attach a copy of the receipt to your return. The more documentation you provide, the better.
For a corporation return, you can correct the mistake by filing Form 1120X. If the business is an S corporation, you will redo Form 1120S and check “Amended Return” box at the top of the first page. The same applies for a business filing as a partnership: you redo Form 1065 and check the “Amended Return” box at the top of the first page.
You must be careful when amending a return for a business taxed as an S corporation or as a partnership. When amending a business return of a flow-through entity, this will generate an amended K1 form that will flow on the owners’ personal returns. Thus the business owners will now have to amend their own personal income tax return by filing Form 1040X.
Generally, for an individual tax return, for a credit or refund, you must file Form 1040X within three years after the date you filed the original return or within two years after the date you paid the tax, whichever is later.
Give us a call today, so we can help you determine the right course of action for you.