If you forgot something on your tax return or made a mistake, the first thing to know is not to panic. But, CPA and TurboTax (INTU) - Get Intuit Inc. (INTU) Report expert Lisa Greene-Lewis says that you may not even have to amend even if you made a mistake.
"There are cases when you don't need to amend. If it's a small amount of income, if you transposed a number or if you left something out, the IRS will make an adjustment on your return," Greene-Lewis said.
Here's what you need to know about amending your tax returns:
- The IRS will make small adjustments for you
- The IRS will send you an adjustment letter letting you know what adjustments they made
- Make sure the IRS has processed your first return before amending. You may get a rejection on your amended return if the first return hasn't been processed yet.
- you can now e-file your amended returns, which wasn't an option in the past and was implemented in the tax year 2019.
- Give the IRS enough time. You actually have three years to get it done.
- Don't be afraid to amend -- it's not a red flag.
- The form you need is the 1040-X, which you can download and fill in using any online service like TurboTax.
"If you are amending and already used TurboTax for your original tax return, that form is automatically filled out with the information you entered in when you go through the amended process," Greene-Lewis says.
When it comes to unemployment, many people think they have to amend for unemployment because it came out after the fact that the $10,200, or $20,400 if you're married and filing jointly, is not taxable because of the American Rescue Plan.
Greene-Lewis says that the IRS recently announced that there's nothing you need to do. They will make adjustments and give you that money back if you already filed and paid taxes on that unemployment income since it's now tax-free.