Do I Have to File an Amended Return?
Technically, no, an amended return will not always be necessary. For errors involving omitting a standard income form such as Form W-2 (Wage income) or Form 1099-R (Retirement Income), the IRS will usually catch your error and send you a notice. For almost all errors involving failure to include a deduction or a tax credit, the IRS will not catch this and your only remedy is to file an amended tax return.
Although the IRS may catch your error, it is still strongly advisable to file an amended return as soon as possible after you discover an omission or other necessary correction. If you file an amended return before the deadline of the original return, you will avoid most, if not all, penalties and interest on the correction. Further, if you file a corrected return before the IRS catches your error and sends a notice, the IRS most likely will not charge a negligence penalty, although you will still owe interest on any taxes paid after the due date of the original return.
It can be up to two years before you receive a notice from the IRS that an error has been found and additional taxes have been calculated on your return. During this time period, an alarming amount of penalties and interest can accrue. It is far better to just file an amended return as soon as you realize that your tax return was incorrect.