Will I Owe Additional Taxes If I File an Amendment? Tax Owed Question

Yes, you'll likely owe some additional taxes on that unreported income. Since it was freelance work, you'll owe both income tax and self-employment tax (which covers Social Security and Medicare) on the $3,200. The good news is that filing an amendment voluntarily before receiving any notice from the IRS usually means you'll avoid any serious penalties beyond interest. The IRS generally charges interest on unpaid taxes from the original due date of the return until you pay the balance. The sooner you file the amendment, the less interest will accumulate. For the process, you'll need to file Form 1040-X and include any other forms affected by the change (likely Schedule C for the freelance income and Schedule SE for self-employment tax). Once you calculate the additional tax due, you can either pay it all at once or request a payment plan if you can't afford to pay the full amount immediately.

I went through something similar last year and discovered taxr.ai (https://taxr.ai) which seriously saved me when doing my amendment. I had forgotten to include some stock sales and needed to figure out how much I'd owe. What I liked about taxr.ai is that you can upload your original return documents and any new documents, and it shows exactly what changed and how much additional tax you'll owe before you file anything. It prevented me from making mistakes on my amendment (which could've caused even more delays) and gave me peace of mind knowing exactly what I'd owe. The calculator even showed me the estimated interest so I could budget for it. Much easier than trying to recalculate everything manually!

Just wanted to update everyone - I tried taxr.ai after posting my skeptical question. I was really surprised how well it worked for my situation. I had a mix of missing 1099 income and incorrectly reported business expenses. The tool showed exactly how my tax calculation changed and what I'd need to pay. What really helped was seeing all the forms side by side - original vs amended - so I could understand exactly what changed. Saved me from calling my accountant who charges $200/hour for amendments! The interest calculation was also helpful since I could see exactly how much extra I'd owe for filing late. Highly recommend if you're doing an amendment.

If you're worried about how to handle the payment after filing the amendment, you should check out Claimyr (https://claimyr.com). I was in a similar situation last year and needed to set up a payment plan with the IRS, but could NOT get through on the phone. Claimyr got me connected to an actual IRS agent in about 15 minutes when I had been trying for days on my own. The agent helped me set up a payment plan that I could actually afford (about $120/month). There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c It made a huge difference being able to talk to someone directly instead of trying to figure everything out online. The IRS agent also waived some penalties since it was my first time making this mistake and I was voluntarily correcting it.

I need to publicly eat my words about Claimyr. After posting that skeptical comment, I decided to try it myself since I was desperate to find out about my amendment status. I got connected to an IRS agent in 12 minutes (I timed it) after spending WEEKS trying to get through on my own. The agent was able to tell me exactly where my amendment was in the process and gave me an estimated completion date. They even noted my account that I was waiting on this to set up a payment plan. The whole call took maybe 25 minutes total and solved issues I'd been stressing about for months. Completely worth it just for the time saved and peace of mind.

Something nobody's mentioned yet - you might want to look into making an estimated tax payment for the current year too. If you're still doing freelance work, you could end up in the same situation next year with owing taxes. The IRS has a system where you're supposed to pay taxes quarterly if you have income that doesn't have taxes withheld. The due dates are April 15, June 15, Sept 15, and Jan 15 of the following year. It helps avoid a big bill and potential underpayment penalties at tax time.

Don't forget about state taxes too! If you owe federal taxes on that unreported income, you probably also need to file a state amendment and pay additional state taxes. The process varies by state but is usually similar to the federal amendment.