Will I Owe Additional Taxes When Filing an Amendment?

If they file the amendment soon, will they still get hit with the full penalties? Or does the IRS take into account that they're correcting the mistake voluntarily?

Filing voluntarily before receiving any notice from the IRS definitely works in your favor. The IRS is generally more lenient with taxpayers who come forward on their own to correct mistakes. You'll likely still have some penalties, but they're often reduced in these situations. The standard failure-to-file penalty is 5% of unpaid taxes per month (up to 25% total), but since you already filed your original return on time, you'll avoid the worst of that. You'll mainly face the failure-to-pay penalty and interest, which are much less severe. In some cases, if you have a good history of compliance, you might even qualify for penalty abatement.

How accurate was it compared to what you actually ended up owing? I'm considering using it since I might need to amend too (forgot a small investment account).

Does it help with calculating the penalties too? That's what I'm most confused about when doing amendments.

The calculation was spot-on for the actual tax amount. The final number from the IRS was within about $12 of what taxr.ai estimated, and that small difference was just due to some rounding in how interest was calculated. I was impressed with how accurate it was. Yes, it does estimate penalties and interest too! It asks when your original filing was completed and when you're planning to file the amendment, then calculates the penalties based on that timeframe. It breaks everything down—additional income tax, self-employment tax if applicable, estimated penalties, and interest. Really takes the guesswork out of the whole process.

Wait, how exactly does this work? Seems kind of sketchy that they can somehow get you through when calling directly doesn't work.

Yeah right, this sounds like a scam. If the IRS has hour-long wait times for everyone, how could some random service possibly get you through faster?

It's actually pretty simple - they use technology that continuously calls and navigates the IRS phone system for you. When they finally get through, they connect the call to your phone. It's not skipping the line - they're just automating the frustrating part of constantly redialing and working through the phone tree. Nothing sketchy about it - they don't ask for any personal tax information or talk to the IRS for you. They just handle the annoying part of getting connected, then it's just you talking directly with the IRS agent. I was skeptical too until I was desperate enough to try it. Was definitely worth it when I needed specific guidance on my amendment that I couldn't get online.

Thanks for mentioning the state filing! I totally wasn't thinking about that. Do I need to wait until the federal amendment is processed before doing the state one?

In most cases, you should file both amendments around the same time. You don't need to wait for the federal amendment to be processed before filing your state amendment. However, some states do require you to attach a copy of your federal amendment (Form 1040-X) to your state amendment form. Each state has their own amendment form and process. For example, California uses Form 540X, New York uses Form IT-201-X, etc. Check your state's tax department website for the specific form and instructions. The state amendment process is usually similar to the federal one, but processing times can vary significantly by state.

Did you have to pay immediately or did they bill you after processing the amendment?