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File A Form 1040X To Correct A Past Federal Tax Return Mistake

Published 4/15/08 (Modified 3/9/11)
By MoneyBlueBook

Back when I was in college, I knew absolutely nothing about filing my taxes. Yes, I was a college finance major at the time, but I don't recall learning anything practical about taxes, deductions, or income withholding in any of my classes - at least not anything involving the actual process of filing one's tax return. At the time I had a part time job working at a school computer lab making some extra money. Every week I received a pay check but I never paid it much attention. I barely knew what the numbers meant - wages and FICA, they were all the same to me - all I knew was that the government was taking a large chunk of my meager pay check every week, leaving me with only peanuts. Since I made so little at the time, only a few thousand dollars for two semesters of work, when it came time to file my taxes, I decided to try doing it myself. My parents weren't much help since they were living overseas and had expressed their wish for me to become more financially independent and self reliant.

Sometimes You Make Mistakes in Life - And Taxes Are More Prone To Errors Than Anything Else

Despite knowing next to nothing about taxes, I still somehow managed to file my income tax by following the Internal Revenue Service (IRS) instructions, albeit in bumbling fashion. This was before I started using free tax preparation solutions or utilizing electronic do-it-yourself tax preparation programs like TurboTax or H&R Block's Tax Cut (read my detailed TurboTax TaxCut review). Even though my income was low enough to file a simple 1040EZ with only one set of W-2's, as a tax newbie, the first year's filing experience still took hours and hours. The following year I had significant capital losses due to the dot-com stock market crash of 2001 so I had to file the regular Form 1040 return. The process took forever but somehow after many hours of filling in stock data, I successfully completed my tax filing (or so I thought at the time). Unbeknownst to me at the time, but I had forgotten to fill in my federal income tax withholding numbers for two straight years.

It wasn't until I started law school during the third year that I decided to review my old tax forms. During that time I was enrolled in my school's low income taxpayer clinic where I was assigned to help low income clients fill out their tax returns and represent their interests before the IRS. In the process I became more educated about taxes. One day on a hunch, I decided to take a look at my old tax returns and was stunned at what I discovered. Apparently I had been filing my taxes incorrectly for the past two out of three years. The reason none of my returns had triggered an IRS audit or unpaid tax liability investigation was because I never owed any taxes in each of those years due to my low $3,200 annual income. However, I had completely neglected to include any information about federal income tax withholding on my submissions. After crunching a few numbers, I realized I was entitled to tax refunds of approximately $340 for each of those two past years, for a total of almost $700. Almost three years had past at that point, but there was still time to correct the tax overpayment mistakes and claim my tax refund - I could file a Form 1040X Amended Federal Income Tax Return.

Tax Mistakes And Erroneous Filings Should Be Amended Upon Discovery

The IRS has a complex system of computers that will detect most simple mathematical calculation mistakes that result only in a few dollars here and there. However, more significant mistakes like the underreporting of certain Form 1099 income sources or failing to report self employment income may come back to bite you in the butt if you don't report them eventually. The IRS will impose stiff penalties and interest on taxpayers for such tax shortfall violations. I don't recommend trying to duck the obligation or hoping the danger will pass. If you catch the tax mistake before the IRS does, you may be able to avoid and avert a substantial amount of IRS tax penalties. Yes you may need to pay some interest for making the mistake in the first place and not paying on time, but the consequences for not catching it until much later can be disastrous. IRS unpaid tax penalties are ridiculously harsh.

Keep in mind that not all tax filing mistakes have negative consequences. Oftentimes they are detrimental only because they deprive the taxpayer of legitimate refunds due to overpayment of tax, like in the situation I described above. Sometimes for example, the taxpayer overlooked a more beneficial tax filing status such as head of household but did not realize that until later. Remember, so long as you are not engaging in illegal tax evasion, there is nothing wrong with finding legal methods of reducing your tax liability to boost your take home refund.

The Process Of Filing A 1040X Amended Return To Correct A Past Tax Return Mistake

The current time limit for filing an amendment to correct a past tax return is generally 3 years. So long as you are within 3 years of the filing date of the erroneous tax return, you may file a Form 1040X to fix it and reap whatever tax benefits offered. Of course, if that means you have to pay more in taxes, that's part of the trade off for getting it right. You may draw some unwanted attention and scrutiny of your past tax returns, but keep in mind, the IRS is likely to catch the mistake eventually so it's usually best to keep your returns currently and historically accurate. You never want to live your life in perpetual and continuous fear of a full blown IRS audit.

However, for those who failed to pay all of the taxes owed during the past original years filed, your time limit to amend the mistake is shortened to 2 years. From the date that you finally paid the tax, you will have only 2 years to correct the mistake, instead of the usual 3. But if your 2 year deadline arrives later than the standard 3 year deadline, you are permitted to file your 1040X at the later date.

The instructions for filing 1040X are fairly straight forward. Currently, taxpayers who want to file their 1040X Amended Returns online are out of luck since the IRS is not presently accepting 1040X Forms electronically. I'm sure they will bumble their way around to setting that option up eventually but for right now, amended 1040X filers must mail and submit them in paper form. The form itself is rather self explanatory. It does require that you locate archived copies of your past tax returns so you can transfer the original information onto the claim form. You have to list the information you originally reported, and include what your corrected numbers are. Finally you have to state brief reasons why you are now making the corrections. In my case, the reasons were simply that I made a few tax preparation errors by not including tax withholding information.

When filing your 1040X, remember to submit and file a separate 1040X Form for each year you are amending, and don't forget to sign each one. Also, be sure to write down the year of the tax return that you wish to amend at the top of the 1040X Form. This is such a common mistake to make. After all, you don't want to end up having to submit yet another 1040X to amend your incorrectly filed 1040X do you?

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7 Responses to “File A Form 1040X To Correct A Past Federal Tax Return Mistake” 

  1. Lynnae says:

    I had to file a 1040X one year, and I was surprised at how easy it was. Unfortunately, my mistake was in my favor, so we ended up owing the IRS more. LOL

  2. Korrie says:

    I filed my 1040X back in March, and have yet to hear a response - is this to be expected?

  3. Phyllis says:


    I am a "senior citizen" here, trying to do my taxes online. I have had little income this year, and my interest on my bank account came to $1.66. I forgot to enter it! Isn't there a limit on when the interest actually begins, like $3 etc. so I don't have to send in a form? Trying to do my state taxes here, and realize I have to enter line 8a. Is a $1.66 "taxable interest"? Should I bother? Or can I leave the line blank in my state taxes also? Unsure what to do.

    I get some of my rent refunded through the Homestead Credit if I can get my taxes done. (With this economy, do not want to wait), and I need a car asap. Do not know if I should bother. Sooooo frustrated.


  4. Danielle White says:

    You only have to report interest over $10.00. You're fine.

  5. Jacki says:

    I am a sophomore in college and last year (my freshman year) I decided to file my taxes online, although I made only a few thousand dollars. I received a Form 1098-T in the mail, and I didn't know what to do with it, so I just put it in my folder of important things and waited for the website to ask something about it. It never asked, so I didn't do anything with it. This year, I decided to file online with H&R Block's Tax Cut program, and once again I received a Form 1098-T; it did ask for the 1098-T, but since I was a dependent of my parents' I couldn't file it. My parents had already submitted their taxes a week before I did, so when I told them about it they entered it into the computer and they were able to receive the refund. They were even able to use the one from the year before that. So, they waited until they got their refund and they filled out the 1040X and submitted it last week. Am I guaranteed the refund that the website (Tax Cut) showed, and if so, how long will it take before I receive it? Will I (rather, my parents) get a letter stating whether I will get one or not? Your, or someone's, help would be greatly appreciated!


  6. Lyne Ward says:

    I did my taxes with a tax software program.. got them all done and sent them in. Got the money back from the state and Federal. Was looking them over today to file them in my files and noticed that there was a mistake on income from a rental.I put in the number right but I quess the computer didn't respond to one Zero... How long do I have to file a 1040X?

  7. Gloria says:

    I filed a 1040X and I am due a refund. The 3 years deline has passed. How can I get my refund?

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