Is There a Penalty for Filing an Amended Tax Return?

No one has ever said that doing your taxes is easy. After all, there's a reason why an entire profession has grown up around people doing your taxes for you.

Whether it's you or a CPA who files your tax return, it's almost inevitable that at some point, there'll be a mistake on your return or an oversight where you forgot to include something important like a form of income you forgot to report.

Even the Internal Revenue Service (IRS) is human, and it understands that everyone makes mistakes. Fortunately, an error on your tax return is one mistake in life that can be fixed – and there might not even be any IRS penalties.

Is there a penalty for filing an amended tax return?

In most cases, no. If you make a mistake, even a big mistake like forgetting to report all your 1099 earnings, and you need to resubmit your tax return, there's no need to worry. The IRS has seen everything, including tax fraud and tax evasion, which are federal crimes. You probably won't receive IRS penalties for refiling unless you're committing those crimes. In the end, they just want you to pay what you owe.

That said, if the mistake you made means you owe more taxes, you might get a penalty for underpaying or paying late, but don't assume right away that you'll get a penalty for filing an amended tax return. The amended tax return deadline is the same as the dreaded April 15 deadline, and if you submit your amended return by then, there's nothing to worry about. You won't receive a penalty, and no interest will accrue.

And, there are exceptions to that amended tax return deadline. Contrary to the common perceptions about the IRS, the agency can actually be pretty reasonable when it comes to honest mistakes, especially if it's the first mistake you've made. If you write up an explanation about why your mistake happened and attach it to your amended tax return, it's likely the IRS will go easy on you. Just make sure you use the word "abatement" in your write-up.

What Is a First-time Penalty Abatement?

Also called an FTA, this administrative waiver is something the IRS can grant to people for three reasons:

  1. Failure to file
  2. Failure to pay
  3. Failure to deposit penalties

Filing an amended return can fall under a couple of these categories. That's why you'll need to specifically request an FTA in your explanation letter with your amended tax return.

The IRS will provide this waiver if the applicants meet certain criteria, because they want taxpayers to have a compliance record that's cleared of any issues. Essentially, every taxpayer is allowed to make one mistake.

How Can I Stop Mistakes From Happening on My Tax Return?

As with most things in life, the more organized you are, the easier your taxes will be.

Try to keep your tax information organized as you go, throughout the tax year. When that April 15 deadline is around the corner, spend some time getting all your information organized before you even start filling out your tax return.

3 easy ways to organize your taxes

  • Do your taxes as soon as you have all the information you need. Don't wait until the last minute because you're more likely to make mistakes if you rush to finish.
  • Have a look at last year's tax return. Compare it to the one you're working on now, and see if you've left anything out.
  • Do a "proofread." As any writer will tell you, you can never have enough revisions. Read the whole return to make sure it's correct before you submit it.

How can FlyFin help?

There's tax software that can help with your taxes, and then there's FlyFin. This powerful A.I.-based tax engine was built to help self-employed taxpayers and freelancers find every possible deduction in their business expenses.

24/7 consultation support from FlyFin's tax CPA team answers every question freelancers have on the fly. At tax time, CPAs are there for users to file their returns with 100% accuracy.

If you're self-employed and worried about tax penalties, use FlyFin's tax penalty calculator to make sure you never receive a penalty from the IRS.  

Don't wait

When it comes to filing an amended tax return, you might as well just get it over with. As with most tax-related issues, the longer you wait, the more numerous and steep the consequences are likely to be.

Besides, it probably won't be as difficult as you think it's going to be.

FlyFin CPA Team

FlyFin CPA Team

With a combined 150 years of experience, FlyFin's CPA tax team includes tax CPAs, IRS Enrolled Agents and other tax professionals, offering users the most comprehensive tax advice and preparation.

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