Correct tax return mistakes before the IRS discovers them

Correcting tax returns before the IRS discovers the errors can save you a substantial amount of money in penalties. Accuracy-related penalties are 20 percent of the additional tax imposed by the IRS.

There are two ways you can fix a mistake on your tax return and avoid costly penalties.

Filing a superseding return allows you to treat your new information as if you had included it on your originally filed return. A superseding return can be either a corrected return (duplicate Form 1040) or an amended return (Form 1040X) that is filed before the deadline. If you filed an extension the extension deadline becomes your due date for filing the superseding return.

Superseding returns can also be filed for business entity returns, such as Form 1120 or Form 1120S for corporations and Form 1065 for partnerships.

Fortunately, the IRS uses the tax shown on the superseding return to determine most penalties. This includes the tax underpayment penalty and the accuracy-related penalty in an audit.

Filing a superseded return does not allow the IRS additional time to audit and assess additional tax.

When filing a corrected duplicate return on Form 1040 or another form, put “SUPERSEDING RETURN-IRM” in red at the top of page 1 of the return.

A superseding return can also be filed on Form 1040X, and you may be able to efile the amended return.

If it is past the deadline for filing a superseded return, you can file a qualified amended return. You will be required to pay interest on the additional tax as of the due date of the return. However, the penalty is eliminated if you timely pay your IRS bill.

Generally, it is considered a qualified amended return if you file it prior to the date the IRS contacts you for an examination of the return for that tax year. If you file your amended return before the IRS contacts you about the missing income, it is considered a qualified amended return.

Be sure to be able to provide proof of the date the IRS receives the return since you may need to prove that you filed a qualified amended return.

If you discover that you have made a mistake, correcting it as soon as possible will save penalties, additional interest accruals, and a possible IRS review of your return.

David Zubler is a tax accountant and Enrolled Agent representing clients before the IRS with over 25 years of tax experience. He is the author of four tax books and is the founder and president of Your Tax Care. The company provides business and tax education to the public at its website, David can also be contacted by email at