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How to Amend Tax Returns

Well, we all make mistakes, don’t we? But a mistake concerning tax returns often gets us more than just worried. Let's suppose, you come across a piece of new information or find out a tax deduction or credit you are eligible for after filing your return, what should you do? Should you let go of the money? As per the IRS, you don’t need to! There’s a simple and convenient way to correct errors on previous tax returns, commonly known as, tax amendment.

In this article, we will discuss:

  1. What is an Amended Tax Return?
  2. How an Amended Tax Return Works
  3. When to File an Amended Tax Return
  4. How to Amend a Tax Return
  5. Downsides of an Amended Tax Return

What is an Amended Tax Return?

In simpler words, an amended tax return is a form filled out to make corrections to a previous year's tax return. An amended return is filed to correct errors, claim a more plump tax status, such as a tax refund. One can also file an amended return to report correct income stats or change tax credits. Calculation mistakes, though, don’t need correction. The IRS automatically adjusts mathematical errors and changes the tax liability according to that. To file your amended tax return, simply fill out Form 1040X, available on the IRS website, and mail it with the additional documents that your previous return lacked.

How an Amended Tax Return Works

If you are a US taxpayer, you are expected to file your taxes every year for the previous year. In case you realize that you have made a mistake in filling out your tax forms or your personal/financial circumstances that can affect your tax liability has changed after you have submitted your return, you should file an amended tax return. In the amended return, you should enter the corrected information, mention the reason why you are filling the amendment and the change in the tax liability. You don’t have to re-do the entire tax return – only the necessary changes will suffice. An amended return can be filed even after the last date of tax filing has passed for the tax year.

What happens in the case of mathematical errors

You’re certainly not required to file an amended return in case you have made some calculation mistake. On spotting an error with the figures, the IRS adjusts it with the due refund or bills the extra tax liability separately.

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What happens in the case of misplaced documents

In an event of misplaced documents, where a taxpayer fails to attach the right form or schedule with the original tax return, the IRS usually sends out a letter requesting the specific document.

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When to File an Amended Tax Return

The most common reasons for filing an amended return includes a change in filing status, change in the number of dependents claimed, or incorrectly claimed tax credits or deduction, misreported income, wrong social security number of the dependents, and so on. The below pointers will give you a quick rundown of the circumstances under which you should never miss to file an amended tax return.

  • Change in taxpayer’s filing status – Suppose you filed your return as a single and got married on or before the last day of the tax year. In that situation, you will need to amend the previous tax return by filling your present status as married filing jointly or married filing separately.
  • Change in the number of dependents claimed – You must file an amended return to add-on extra dependents or remove dependents that you claimed previously.
  • Incorrectly claimed tax credits and deductions – Let suppose you realized that you qualify for a specific deduction, that you have forgotten to mention on your return. In that case, you have no choice but to file an amended report mentioning the same.
  • Misreported income information – This one is to be taken more seriously as it can trigger action against you. If you have lied in the income column of your return and your actual income turns out to be more, the IRS can take action against you. Say you receive additional documents for the tax year like Form 1099 (for miscellaneous income) or K-1 via mail after the tax deadline – you should file an amended return to report the additional income.
  • Incorrect tax paid – If you owe the government more tax than you have paid, you might want to file an amended return with the IRS to avoid the unnecessary penalties.

How to Amend a Tax Return

Form 1040X has three columns – A, B, C. Column A is for previously reported figures. You would need to enter the correct figures in the column C. The column B will record the clear difference between the columns A and C. Amendments made to a tax return can either result in a refund, or a balance due or no change in tax liability at all. The taxpayer has to explain the changes and give legit reasons for making each of the changes in a section on the back of Form 1040X. Let’s walk you step-by-step through the process of filing an amended tax return.

Step 1: Gather all the necessary documents

Gather all your old and new documents as you might need to refer to your original tax return while filing an amended one. Any documentation that supports or relates to your amendments, such as proof for the new deduction you are claiming, or a Form W-2 (annual payslip) which you did not have while filing the last return can be of utmost help. In case of a missing W-2, file for Form 4852.

Step 2: Get your forms right

Make sure you download the necessary forms for the tax year you are amending and not the year in which you are filing the amendment. The IRS maintains a consolidated database on its website where you can assess tax forms for previous years. Alternatively, you can file your return through TaxExtension.com. This way you will automatically find the form you require to submit.

Like we said before, you don’t need to submit new forms for the entire tax return. Submitting the forms for the sections you're making changes to is enough. Let’s follow through an example – if you are claiming a charitable contribution deduction, you are required to report a new Schedule A reflecting your charitable contribution alongside your itemized deductions.

Step 3: Fill out Form 1040X

You must download the latest IRS Form 1040X, Amended U.S. Individual Income Tax Return. ezTaxReturn.com can help you through the entire process. This form is self-explanatory and requires you to put only the updated information. You can skip copying information from your original return. As told above, please ensure that you write an explanation for amending your return on the space provided at the back of the form.

Step 4: Time for submitting your amended return

Before sending the IRS your amended return, via mail, double-check, or rather, triple check – if you’ve put all the figures correctly, attached all the required forms, schedules, supporting proofs. In case the amendment results in a higher tax bill, you need to include the extra tax payment with your return. Doing so can minimize the interest and the penalties since you are making a late payment.

Note: The IRS takes 8-16 weeks to process amended returns.

Let’s take a quick look at the below table charting the pros and cons of amending your tax refund.

Pros Cons
You can avoid a penalty for misreporting income/ correct errors. It takes 16 weeks or even longer to process an amended return.
You can claim deductions that you were entitled to but didn’t file. Form 1040X can not be e-filed.
You can correct information that changed since you filed originally. The 3-year statute of limitations applies on getting tax refunds.


Downsides of an Amended Tax Return

As given on the table above, the Form 1040X cannot be submitted online. After filling out the form, one has to mail it to the IRS Service Center, where the original return has been processed. The IRS manually processes the amended returns, and it takes them 16 weeks or even longer depending on the complexities of the return.

Also, there is a 3-year statute of limitations on issuing tax refunds. For the same reason, any amended return that will result in a tax refund has to be filed within a time frame of 3 years from the date when the original tax return was filed. Any refund received after 3 years will only cover overpaid taxes during the previous 2 years.

However, an amended return to account for extra income, or over-claimed deductions, does not come under any such stature and can be filed any time.