What can you do if you realize you forgot important information or made an error on your tax return? Don’t panic! CPA and TurboTax tax expert Lisa Greene-Lewis and TheStreet offer this guide to the process of amending a tax return.

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Video Transcript ~ Amending Tax Returns – Presented By TheStreet + TurboTax:

- [Tracy] So you did the right thing. You got your return in early. You’re all excited, only to realize you forgot something, or maybe you made a mistake. It’s okay, don’t panic. Thankfully, the IRS knows that stuff happens, so you can amend your return and file a new one. There’s things you need to know, though, and thankfully, Lisa Greene-Lewis, CPA and TurboTax Expert, is here with us right now. So the first thing is people shouldn’t panic. But to your point, you might not even have to amend even if you made a mistake.

– Right, yeah, there are cases where you don’t need to amend, so if you, you know, there’s a small amount of income or something left out, the IRS will make an adjustment on your return, so say you left out a form that reports your interest income and it’s a small amount or you transposed a number. They will make an adjustment and send you an adjustment letter letting you know what they, what adjustment they made. And then, secondly, you wanna make sure that the IRS has processed your first return before you try to amend, because, especially now that you can eFile your amended return, you may get a rejection on your amended return.

– Yeah, so you wanna give the IRS enough time, so don’t panic. In theory, you actually have three years to get this done, even though, if you’re gonna amend and get money back, people are gonna want it fairly quickly, but yeah, you’re gonna have to be patient on this. The last thing you want is it to get crossed in the processing, you know, web that they weave. And you mentioned the eFile. That’s great news, ’cause in the past, you couldn’t file an amended return electronically. But now you can.

– Yes, you can as of tax year 2019. That was something that they implemented and that is a good point you brought up that you have three years from the filing deadline to do an amended return so especially if you wanna amend to claim, you know, a tax credit that you didn’t get and claim a tax refund, you wanna still amend your return so you can get that refund.

– [Tracy] Right, and don’t be afraid to do it. It’s not a red flag. I think people are always scared. So the form they need is the 1040-X. Actually sounds like a scary form. But the 1040-X is available, right? They could go download it or fill it in, quite frankly, using TurboTax, using any online service, quite frankly.

– [Lisa] Right, yes, if you’re, if you amend and you already used TurboTax for your original tax return, that form is automatically filled out by the information you enter in when you go through the amended process.

– [Tracy] And more importantly for this year, a lotta people are gonna think they’re gonna go have to amend for the, for unemployment. Because something came out basically after the fact, right, that $10,200 is not taxable now, so maybe if you could explain that a little.

– Yes, so under the American Rescue Plan, there’s a provision that allows your first $10,200 of unemployment income to be tax-free. If you’re married filing jointly, that’s $20,400, and so people are wondering what they should do if they filed before the American Rescue Plan was passed. The IRS just recently announced that there’s nothing you need to do. They are going to make adjustments, and give you that money back. You know, if you already filed and you paid taxes on that unemployment income since this is now tax-free.

– [Tracy] So that’s good, so don’t feel like you have to amend, don’t panic, take your time. The IRS is gonna be so overloaded to begin with this year so give them a minute before you file your amended return. Lisa Greene-Lewis, CPA, TurboTax Expert, thank you for all that.

– Thank you.