Estimate

• Estimations may be the result of employers who close shop and fail to send employees their income information. Other times, taxpayers lose or misplace important tax information. If you're missing your W-2, the IRS allows you to use form 4852 as a substitute for your W-2. You can use your paystubs to complete your form 4852 and mail it to the IRS when it's time to file. If you are a subcontractor and receive a 1099, you can estimate that information on your tax return as well.
  
  

Amendment Process

• Once you receive the accurate amounts of the figures you estimated, compare them to what you entered. If they differ, then you will need to complete an amended return using form 1040X to make the corrections. The form can be found on the IRS website or ordered by calling (800) TAX-FORM. Keep in mind that sometimes the IRS makes computational adjustments on its own. When the IRS adjusts your return, they send you a notice advising you of the change and its impact on your tax. If you do not receive a notice, then you must complete an amended return because the IRS did not adjust your return to account for the discrepancy. The time frame for processing an amended return is eight to 12 weeks and your 1040X must be submitted by mail.
  
  

Considerations

• If you owe tax as a result of your amended return, you should pay the tax you owe as soon as possible to avoid penalties and interest. The failure to pay penalty accumulates at a rate of 0.5 percent of the unpaid tax for as long as it remains unpaid while the interest rate is determined quarterly. If you cannot afford to pay the tax at once, submit form 9465 with your 1040X to request an installment agreement. An installment agreement will allow you to make monthly payments on the tax owed until it is paid in full.
  
  

Warning

• You only have three years from the filing date of your original return to file an amended return and claim a refund. If you file after the three-year period, then you forfeit your right to your refund.