Hi
I came to USA in October 2006. For the three month's salary, I filed online returns for FEDERAL and STATE using Turbotax for my refund which was 2000 USD ( State and Fed both) in Feb 2007.

After that I lived in the US till today that is from OCt 2006 till date ( 1.5 yrs approx)

Question:

I realized sometime back though the IRS accpeted my 2006 return, I filed as a resident alien and not Non resident alien ( I was in NRA status when I filed in 2006 ). This was done unknowingly since I did not know the rules. I found out that I got 500 USD more in refunds last year.

I want to file the return for current year now. Though I have not receievd any letter from IRS should I correct last year's mistake? How can it be done? Will IRS impose any penalty for me since it was IRS only which accepted my return? Kindly clarify on the penalty I might have to pay if I choose to pay the difference now ? Or should I file the return only for this year?

Kindly Advise...

If you come forward voluntarily to correct the return yourself with an amended return (Form 1040X with a Form 1040NR-EZ attached), the IRS will likely waive any penalties and only charge you interest on the additional tax owed.

Truthfully, they will probably NOT notice if you do not correct the return, but if you ever apply for a green card, tax returns ARE checked by the IRS at the request of the USCIS during the application process. That incorrect filing MAY serve as grounds to deny your green card request, so WHY TAKE THE CHANCE?