What it is:
It is important to note that the taxpayer may also need to revise his or her state tax return after revising a federal return.
Additionally, the IRS typically catches simple math errors while processing the return and may contact a taxpayer if a required schedule is missing, it does not catch every problem right away. Even in this scenario, taxpayer may be liable for penalties and accrued interest . Filing an amended return as quickly as possible is the easiest and cheapest way to make things right.
How it works (Example):
Let's assume you submit your Form 1040 on April 15 and then discover that you made a mistake in your filing status, your income, your dependents, or your deductions. To correct the error, you can file a Form 1040X (Amended U.S. Individual Return)--also called an amended return.
In general, taxpayers have two or three years from the date of their original return to revise their returns, depending on their circumstances. It is not possible to submit corrections for more than one year on one form; each correction must be submitted individually and in its own envelope. Taxpayers may also amend amended returns.