What should a taxpayer do upon identifying an error in their tax return?

When a taxpayer identifies an error in their tax return, the appropriate action is to amend the return and make a voluntary disclosure. Amending the return ensures that the taxpayer corrects the inaccuracies reported, which is essential for maintaining compliance with tax laws and regulations. This process typically involves filling out a specific form designated for amendments, providing the correct information, and submitting it to the tax authority.

Making a voluntary disclosure shows good faith on the part of the taxpayer. It demonstrates their willingness to rectify mistakes proactively instead of waiting for them to be discovered during an audit or by the tax authority. This can often mitigate potential penalties or interest that might accrue due to the error.

Correcting the return promptly not only aligns with legal requirements but also ensures that the taxpayer's financial record is accurate, which can impact various aspects of their financial life, such as eligibility for loans or assistance programs.