What should you do after receiving an IRS notice about your tax return?

Receiving an IRS notice can feel alarming, but most notices are informational and fixable. In many cases you will either respond directly to the notice (for example, sign and return an agreed adjustment) or formally amend your return with Form 1040-X to correct income, credits, filing status, or other errors. The goal is to resolve the discrepancy quickly with clear documentation to avoid unnecessary penalties, interest, or prolonged reviews.

Below is a practical, step-by-step guide to handling an IRS notice and amending your return when necessary, with professional tips, timing expectations, and links to additional resources.

1) Read the notice carefully and follow instructions first

  • The IRS notice will explain what it believes is incorrect and why (e.g., unreported 1099 income, math error, or denied credit). Notices usually include a response deadline and a specific process to follow.
  • Some notices require no action other than acknowledging and signing an adjustment form. If you agree with the proposed change, returning the notice as directed may be enough — you do not always need to file Form 1040-X.
  • If the notice is unclear, call the phone number on the notice. Keep records of the call (date, time, representative name, and summary).

(Reference: IRS, About Form 1040-X and Notice guidance — see https://www.irs.gov/forms-pubs/about-form-1040x and https://www.irs.gov/filing/wheres-my-amended-return.)

2) Decide whether to sign the notice or file Form 1040-X

  • If the IRS proposes a simple change and you agree, signing and returning the notice is often the fastest route.
  • If you disagree, or if you need to add omitted income or claim missed credits, file Form 1040-X. Use the amended return when changes affect your filing status, dependents, income, credits, or deductions.

Tip from practice: I’ve often seen taxpayers sign notices without fully understanding future impacts (for example, waiving rights to claim additional refunds later). If you’re unsure, do not sign — instead, consult a tax professional.

3) How to prepare Form 1040-X (what to include)

  • Use the latest Form 1040-X and instructions from the IRS website (always download current forms from irs.gov).
  • Include a clear, concise explanation of each change in Part III (or the explanation section). Explain why the original return was incorrect and cite supporting documents.
  • Attach supporting forms or schedules that changed (for example, corrected W-2 or 1099, new Schedule C, corrected Schedule E, or Form 8862 when claiming certain credits).
  • If you are amending more than one tax year, file a separate 1040-X for each year.

Checklist of common attachments:

  • Corrected W-2 or 1099 (Form W-2c or corrected 1099)
  • Receipts, bills, or canceled checks supporting deductions
  • Schedules or forms that changed (e.g., Schedule C, Schedule E, Form 8949)
  • A copy of the notice you received

Internal resource: For detailed field-by-field steps, see our “Step-by-Step Guide to Filing Form 1040X (Amended Return)” for examples and templates: https://finhelp.io/glossary/step-by-step-guide-to-filing-form-1040x-amended-return/

4) Timing: when to file and refund deadlines

  • Generally, you have three years from the date you filed your original return, or two years from the date you paid the tax, whichever is later, to file an amended return and claim a refund. This is the IRS statute of limitations for refunds.
  • If you owe additional tax, file the amendment as soon as possible and pay the balance to minimize interest and penalties. Interest accrues from the original due date of the return.

(Reference: IRS Publication 556 and Form 1040-X instructions — https://www.irs.gov/forms-pubs/about-form-1040x and https://www.irs.gov/pub/irs-pdf/p556.pdf.)

5) How long will the IRS take to process an amended return?

  • Processing times for amended returns are longer than standard returns. As of 2025 the IRS generally states amended returns can take up to 12–16 weeks or longer to process, depending on the issue and documentation required. Use the IRS “Where’s My Amended Return?” tool to check status: https://www.irs.gov/filing/wheres-my-amended-return.
  • Keep copies of everything and be prepared for follow-up correspondence. If the IRS requests additional documentation, respond quickly and by mail unless otherwise directed.

6) Penalties, interest, and how amendments affect them

  • If your amendment shows additional tax owed, interest starts from the original due date and penalties (such as failure-to-pay) may apply. Paying as soon as possible reduces additional charges.
  • If you successfully amend to claim a refund, penalty relief is not usually an issue — but keep in mind the refund statute of limitations noted above.
  • If you made an honest mistake and proactively corrected it, the IRS often treats that more favorably than if you ignore a notice.

7) When an amended return can trigger additional review or audit

  • An amendment can prompt further review if it introduces significant new items or contradicts third-party information (W-2s, 1099s). Be prepared to document your positions.
  • Include consistent documentation and ensure the math ties to the original and amended amounts. Clear explanations reduce the odds of follow-up.

Internal resource: See our article on “How Amended Returns Affect Your Refund or Balance Due” for scenarios and timelines: https://finhelp.io/glossary/how-amended-returns-affect-your-refund-or-balance-due/

8) State returns: don’t forget state income tax consequences

  • If you amend your federal return, you may also need to amend your state return. Each state has its own rules and deadlines; check with your state tax authority or a tax professional.
  • Some states have shorter statutes of limitations or different filing thresholds for amended returns.

9) Best practices and professional strategies

  • Act quickly. Addressing an IRS notice within 30 days reduces risk and demonstrates proactive compliance.
  • Keep a single, well-organized file that contains the original return, the notice, the amended return, and all supporting documents. This simplifies any future correspondence or audits.
  • Use certified mail or a trackable delivery method for mailed amended returns and attachments. Maintain proof of mailing and delivery.
  • Consider professional help for complex changes (business income, multiple years, foreign accounts, large credits, or complex adjustments). I often recommend a CPA or enrolled agent when adjustments are material or documentation is nuanced.

10) Example scenarios (realistic illustrations)

  • Missed 1099-NEC: You received a notice showing unreported nonemployee compensation. If the income was yours, file 1040-X to add the income and pay any tax due. Include the corrected 1099-NEC or an explanation; if the payer issued a corrected 1099, attach it.
  • Missed tax credit: If you omitted the Earned Income Credit or education credit, file 1040-X to claim the refund — provided you are within the refund statute of limitations and you include supporting documents.

11) Records retention and follow-up

  • Keep amended-return records for at least three years from the date you filed the original return or two years from the date you paid the tax — whichever is later. In practice, retain records for at least seven years for complex or audit-prone matters.
  • Check the status using the IRS online tool for amended returns and follow up if processing exceeds published timeframes.

FAQ highlights

  • How quickly should I respond to a notice? Respond by the deadline on the notice; if you need more time to gather documents, call the number on the notice and request an extension or explain the delay.
  • Will I be audited if I file an amendment? Filing an amendment does not automatically trigger an audit. However, amendments with large changes or mismatches against third-party data may invite closer scrutiny.
  • Should I file an amended return if I agree with the IRS notice? Often you can simply sign and return the notice. File Form 1040-X only when changes go beyond the notice instructions or you need to claim a refund.

Professional disclaimer

This article is educational and not personalized tax advice. Tax rules change and every taxpayer’s situation is unique. For tailored guidance about your notice or amended return, consult a qualified tax professional, CPA, or enrolled agent.

Authoritative sources and further reading

For practical examples and step-by-step templates, see our related guides on amending returns and how amendments affect refunds linked above. If you’d like help preparing an amendment or reviewing IRS correspondence, consider contacting a tax professional.