Made a Mistake on Your Tax Return? Here's What to Do

Mistakes happen -- but it's important to know what to do in light of one.

Filing taxes isn't necessarily a complicated thing -- but in some cases, it can be. In the course of your filing, you could end up making a mistake that renders your return inaccurate. Here's what to do if that's the situation you're facing.

Does your tax return need an amendment?

It's possible to file an amended or superseding tax return if you made an error on your initial return. But whether you'll need to do that will depend on the extent of the error.

Usually, the IRS is capable of correcting simple math errors. So, let's say you copied over your income correctly from your W-2 and various 1099 forms, only you calculated the wrong refund amount by adding incorrectly. That's something the IRS will generally be able to pick up on and rectify.

Usually, in that situation, the IRS will send you a notice in the mail asking if you agree with the corrected amount. If you do, you'll sign and send back that notice, and that's all you'll need to do.

On the other hand, if you entered the wrong income information on your taxes, or if you failed to report income, then that's a reason to file an amended or superseding tax return. Similarly, if you forgot to claim business expenses that could result in a larger tax refund hitting your bank account, then you'll need to update your tax return for that information to be considered.

Sometimes, banks and financial institutions will issue erroneous 1099 forms and send out amended ones later on. That's information you'll need to update on your tax return.

Whether you'll file an amended return versus a superseding return will depend on whether the tax-filing deadline has passed. If the deadline hasn't passed, you can file a superseding return, which lets the IRS know you want your new return to replace the one you just sent in. If the deadline has passed, you'll submit an amended return.

All told, there isn't that big of a difference between filing an amended return versus a superseding return. In both cases, you're updating the information contained on your taxes. Whether that's a time-consuming process will largely hinge on the extent of your initial error.

You can correct an erroneous return years later

In some cases, you may not realize you made a mistake on a tax return for a year or so after the fact. In that case, you're not necessarily out of luck if that error worked against you. That's because the IRS allows filers to submit an amended tax return up to three years after the original return was filed.

So, say that in doing this year's taxes, you realize you forgot to claim a specific deduction on last year's taxes that resulted in a refund that was $200 less than you could've claimed. In that case, you can file an amended return and go after the money that's yours.

In fact, it's for this reason that it's wise to hang onto old tax documents for at least three years. That way, if you need to file an amendment, you'll have the right information on hand.