Filing your taxes often brings a sense of relief, but discovering a missed or forgotten detail after submission can quickly change that. Fortunately, the IRS offers taxpayers a second chance through an amended tax return, filed using Form 1040-X.
Here is a complete guide on important topics everyone should know before choosing to file an amended tax return. In the following paragraphs, you’ll learn all about amended tax returns, from what your tax professional will be on the lookout for to key timing considerations when filing an amended return.
1. What Is an Amended Tax Return?
Think of an amended tax return as your financial mulligan, a chance to revisit your original filing and set the record straight. Filing form 1040-X, allows you and your tax professional to update key information including reported income, tax deductions and credits, filing status, and much more.
When amending a tax return using Form 1040-X, column comparisons are used to display the original amounts alongside the corrected figures. Your tax professional will also include written explanations for each change, along with any supporting documentation that substantiates the adjustments made to your amended return.
2. Reasons to Amend a Tax Return: What your Tax Professional Will be on the Lookout For
Not every mistake requires an amended return, but knowing exactly when to file one can be tricky. Here are some examples of issues your tax professional may be on the lookout for when reviewing your original filing:
- Unreported income, such as a 1099 that came in late, freelance earnings, or investment gains.
- A missed tax credit or deduction, like the Child Tax Credit, Earned Income Credit, or education-related credits.
- An incorrect filing status, for example, single instead of head of household.
- A corrected tax document, received after filing, such as a W-2c or revised 1099.
- A need to update information about dependents, such as adding or removing one.
- Errors within income, withholdings, or other tax calculations.
Your tax professional may determine an amendment is not necessary. Typically amendments are not required when there is a simple math error, missing forms or schedules, or when the IRS sends a letter specially stating not to file an amendment. However, each tax scenario is unique, so asking for help in determining whether or not you need to amend your return is always the smart move.
3. How to File an Amended Return
Your first step when filing an amended return, If you are expecting a refund from your original return, is to wait until you receive your refund before attempting to file an amendment. The IRS processes original returns first, and submitting Form 1040-X too early can lead to complications or rejection. Once your refund is received and you’re ready to move forward, preparation is key.
Your next step is to schedule a meeting with a tax professional and provide them with all relevant new and old tax information. They’ll need a complete view of your tax picture in order to ensure accuracy. To get the most out of your meeting with a tax professional, bring a copy of your original return, any updated forms like W-2s or 1099s, IRS notices, and documentation for any changes to deductions or credits. The more organized you are, the easier it is for your advisor to guide the process efficiently.
After you have provided your tax professional with the necessary information and documentation they can start working on filing your amended return. The process of preparing and filing an amended return can be a lengthy one, taking anywhere from a few days to a few months depending on the complexity of your case and your tax professional’s workload. Once your amended return has been filed and received by the IRS, they will begin to review and process your return. This step takes patients, the IRS has been known to take many weeks, sometimes many months, getting your amended return fully processed. If you still have questions or if concerns arise throughout the amendment process don’t hesitate to reach out to your tax professional for some extra peace of mind.
4. Deadlines to Amend a Tax Return
Timing matters when it comes to amending a tax return. If you’re hoping to receive a refund, the IRS requires you to file Form 1040-X within three years from the original filing date or two years from the date you paid the tax, whichever is later. Miss that window, and your refund claim may be denied.
However, if you owe additional tax, you can file an amended return at any time. Just be aware that interest and penalties may apply from the original due date, so it’s best not to wait too long
5. Will Amending Your Return Trigger an Audit?
Although many individuals are concerned that filing an amended tax return could lead to an audit, it does not automatically result in one and may not occur at all. While amendments do bring attention to your return, the IRS does not automatically audit every 1040-X. That said, making large changes. Especially those that lead to a large refund, may increase scrutiny.
To reduce your risk of an audit:
- Include all supporting documentation
- Be honest and accurate
- Have a tax professional prepare the amended return
Remaining in compliance with IRS guidelines is the key to ensuring your amended return is processed smoothly, and that you maintain peace of mind throughout the correction process.
Mitchell Erickson, CPA and Manager comments,
“Mistakes happen, it’s how you handle them that counts. An amendment done right can prevent a big headache down the road.”
Conclusion
Tax errors are more common than you think, and the IRS gives us tools to correct them. If you think something was misreported or missed entirely, it is worth exploring whether amending your tax return could help, or protect you from future penalties.
Still unsure? Let us help. At CDS, we have experts who can review prior year returns, decide whether an amendment is necessary, and file an amended tax return. Contact us today at (888) 388-1040.
