Filing Back Taxes This Tax Season
If you suddenly realized you made a mistake on your last tax return and owe more money to the IRS, don’t panic. The tax agency has procedures in place for this issue, as does the state of Georgia. Depending on the mistake, it can be simple to fix the error, although you will likely owe penalties and interest because you are paying the tax after the original due date. If you made a mistake and haven’t caught it, the IRS will likely catch your error and send you an official note notifying you of the error.
What to Do If You Made a Mistake
If you made a mistake on your return, you’ll want to file an amended one as soon as possible. You can use IRS Form 1040X to do so. If your mistake was a math error, the IRS asks that you not file an amendment. The agency will catch the error and notify you of any amounts due. But if you forgot to report income, for example, then you should amend your return.
Form 1040X is used to make corrections to income, deductions, exemptions, dependents, and credits. The form asks for originally reported totals, the correct figures, and the net changes. Part III on the second page allows you to explain all changes and errors. When sending the completed Form 1040X to the IRS, be sure to attach any pertinent forms or schedules, including W-2s and 1099s if those changed. The form must be filed within three years of the date you filed the original return or two years from the date you paid the tax, whichever is later.
Remember when filling out Form 1040X that mistakes can impact more than one line item. Forgotten income, for example, would not only impact adjusted gross income (AGI) but also any itemized deductions that use AGI in calculations.
You should pay any additional tax owed as soon as possible. Do not, however, try to calculate penalties and interest. The IRS will review your amended return and notify you of any interest and penalties afterward.
IRS Sends Notices When It Finds Error
If the IRS finds the error or mistake first, the agency will notify you with a Notice CP2000. If you fail to respond to Notice CP2000, the IRS will follow up with Notice CP3219A. A CP2000 notice usually signifies underreported income, most likely found because the amount reported on your return does not match up with that reported by your employer, bank, or other third party.
You usually have 30 days to respond to a CP2000. If you agree with the IRS’s assessment, then you should follow the instructions provided with the letter. You can include payment for the additional tax due or wait until the IRS sends you a bill. If you disagree with the notice, then you can appeal by following the process noted in the letter.
If you do not respond to the CP2000 letter, the IRS will send you CP3219A, which is a notice of deficiency. Your only option to challenge an additional assessment indicated on a CP3219A notice is to file a petition with the US Tax Court. If you agree with the notice, sign and return it as soon as possible.
Notify the State
If you have discovered a mistake in your return, be sure to also notify the state of Georgia Department of Revenue (DOR). Georgia has a voluntary disclosure agreement program through which taxpayers who have made a mistake can notify the agency of unpaid taxes and receive a waiver of all penalties. If the state catches the mistake first, the DOR will notify you and give you 30 days in which to respond before taking further action.
Have Questions? Call the Experienced Tax Attorneys at Wiggam & Geer
If you have made a significant mistake, or forgotten to report a large amount of income, or received either a CP2000 or CP3219a assessing a major amount of additional tax, we can help. The experienced attorneys at Wiggam & Geer can evaluate the situation, recommend a course of action, and assist you in dealing with the IRS or the Georgia DOR. Contact metro Atlanta’s top tax and bankruptcy attorneys by clicking here or giving us a call at (404) 609-1300.