Each year, the US Internal Revenue Service runs about 300,000 earned income tax credit audits. However, that’s only a tiny fraction of the 25 million EITC filed in the country every year.
Unfortunately, an IRS audit is more than a nerve-wracking experience. It can also result in a whopping 20% accuracy-related penalty.
You might end up facing such consequences if you made a mistake on a tax return.
Fortunately, there are things you can do to address the issue, which we’ll explain in detail below.
File an Amended Tax Return
As soon as you realize you made a tax error, filing an amended tax return should be your first order of business. You can do this if the due date for filing your return has already passed.
However, note that amending tax returns involve mailing the corrected form to the IRS. The IRS doesn’t allow the electronic filing of amended returns.
File a New Original Tax Return
In the US, the tax season usually runs from January 1 to April 15 each year. April 15, in turn, is usually the last day on which individuals can file their annual tax returns. If April 15 falls on a weekend, though, the deadline falls on the following business day.
Now, let’s say that you filed your tax return early only to realize you made errors. So long as the due date for the filing hasn’t passed yet, you can file a new original return. Take note that you have to complete a new form and not an amended tax return.
Interestingly, US neighbor Canada has an opposite regulation for correcting taxes. In the Great White North, you can only file one return per year, so you can’t file a new one if you made a mistake. You can still amend your return, but you need to wait for the Canadian Revenue Agency (CRA) notice.
Either way, you likely don’t want to pay part of any IRS or CRA auditor salary, so make sure you fix those errors ASAP.
Follow the Instructions in the IRS Notice
Sometimes, the IRS does taxpayers the service of correcting minor math errors. In this case, the agency will send you a notice of the modifications they performed. The note may also contain details of other steps you may have to take.
If there’s anything else you need to do, don’t put it off; it’ll only spark the ire of the IRS further. An example is if the agency asks you to send a document you may have failed to file. In this case, respond to them right away, tell them you’re on it, and mail what they need right away.
Don’t Be Overly Anxious if You Made a Mistake on a Tax Return
If you made a mistake on a tax return, don’t let panic or anxiousness overcome you. Otherwise, you might get so distracted you end up making even more errors on your new or amended tax form.
Instead, follow the steps we’ve outlined above immediately. The sooner you do, the less the IRS or the CRA would suspect you, and the easier it would be to fix your errors.
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