Few things feel better than getting your taxes out of the way. After hours, days or weeks of gathering documents, brushing up on changes in the law, deciding between competing software providers or going back and forth with your accountant, it’s a weight off your shoulders to finally sign your electronic signature and hit “file.”
But that weight can pile right back on if an important but unexpected document arrives after you already did the deed. If this sounds familiar, don’t worry: You are not alone.
“This is actually a very common occurrence,” said Anthony DeLorenzo, a certified public accountant (CPA) and tax expert with JustAnswer. “The best course of action is to act immediately and not wait for the IRS to contact you.”
Here’s a look at exactly what that course of action should be.
Don’t Expect Sympathy — and Certainly Not Help — From the IRS
Whether or not a professional preparer filed your returns on your behalf, understand that the buck stops with you in all cases.
“Most importantly, it’s the taxpayer’s responsibility to file an accurate return,” said Mark Steber, chief tax information officer at Jackson Hewitt. “The IRS won’t fix or adjust a return automatically, despite a recent survey from Jackson Hewitt that found that 55% of people think the IRS will do it on their behalf.
“In fact, the IRS can take up to two years to notify a taxpayer of any mistake they find on a tax return. And, if the IRS finds an error — and it won’t be a benefit that will result in a bigger refund, it’s the IRS needing more money — it requires the taxpayer to pay more in possible penalties and interest as well as additional taxes.”
If You Had Help Filing Your Returns, Start There
If a professional preparer filed your taxes on your behalf, that should be phone call No. 1 after you receive the unpleasant surprise of a new document that you didn’t count on.
“If you used an accountant, contact them; they will need to amend your original return,” said Kari Brummond, an accountant with TaxCure.com. “Most accountants will charge an extra fee for this service.”
If you used online software to file your returns on your own, that same program will walk you through the process of amending the return you already filed.
“Most big tax prep software companies have an option that allows you to amend online,” Brummond said. “Costs can vary, but TurboTax, for example, doesn’t charge any extra to amend unless you have to upgrade the forms you were using.”
File an Amended Return — and Expect Slow Going
First of all, don’t panic. You don’t have to do your taxes all over from the beginning. The IRS has a bandage remedy that lets you add the new information to the returns you already filed.
“If taxpayers realize they left off important documents that will benefit them after they filed, they can file an amended tax return,” Steber said. “The IRS allows taxpayers to file an amended return for all open years. An open year usually includes the three years after the due date of the return or filing date or two years after the taxes are paid in full, whichever is later. In order to file an amended return, taxpayers need to use the current Form 1040X, which now can also be done electronically for all filers.”
As a final reminder, Steber cautions taxpayers that, if they amend a federal return, they also must amend their state return if it is affected by the federal changes. But, if you’re looking for instant gratification, you’ll surely be disappointed.
“It can take up to 16 weeks, or four months, for the IRS to process an amended return,” Steber said.
The Good News: You Might Not Even Need To Amend Your Return
Just because your mailbox sneak-attacked you with a new document doesn’t mean you’ll necessarily have to alter the return you already filed.
“The documents need to be reviewed to determine if they will change the tax calculations,” said Rob Burnette, CEO at Outlook Financial Center in Troy, Ohio. “I had a client receive a corrected Form 1099-B from their investment custodian, with the net change being less than $0.10. No amended return was necessary.”
If you do have to make a change, be grateful that the process is a whole lot easier than it used to be.
“The good news is the IRS approved recent year amended tax returns to be filed electronically,” Burnette said, “a vast improvement from having to file them on paper and waiting four to six months for a response.”
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