How to File an Amended Tax Return

Written by Dave Horwedel

Of course we all want the original return to be perfect. But sometimes you receive data that changes the return after you have filed. Maybe you made a mistake. Maybe your tax preparer did. Maybe you falsely reported income on your return, and realize you could be caught. What do you do? File an amended return!

(Note: Contacting an Enrolled Agent/Lawyer first may be advisable for dealing with tax or legal consequences.)

An amended return is done to correct or make changes in an original tax return. If you made a mistake in your filing status or failed to take a deduction or apply for a credit, you can file an amended return. One client filed an amended return to change his filing status to Married Filing Jointly and received a substantial refund. Another had done an earlier year tax return, but neither the client nor her tax preparer had realized that paying her son’s college tuition the year before made her eligible for a $2500 education credit. By filing the amended return in a timely fashion, she was able to get that $2500 refund check due to the education credit she was entitled to.

How Do You File Your Amended Return?

The amendment is done on a Form 1040X on paper (not E-file). When we do your taxes at Torchlight Tax Solution, we have all the forms needed right on our computer system. If you go it alone, you can get the needed forms from the IRS. In addition to the 1040X, attach any needed forms or schedules to the amended return.

As this is an amended return, you are already correcting an error. You do not want to make an error correcting an error. So honestly look at why the error was made. If the person doing the return did not know what he was doing, you may want to get someone else. If you were that person, the same applies. It has been said that knowing when you don’t know is a point of wisdom.

You need not file an amended return to correct math errors because the IRS automatically makes those changes for you.

If you are amending more than one tax return, prepare a 1040X for each return and mail them to the IRS in separate envelopes. Note the tax year of the return you are amending at the top of Form 1040X. DO NOT try to save stamp money by putting multiple forms in one envelope. One form might be totally overlooked when the envelope is opened. This is not theoretical. It has actually happened.

If you are filing an amended tax return to claim an additional refund, wait until you have received your original tax refund before filing Form 1040X. (You may cash your original refund check while waiting for the additional refund.)

If you owe additional taxes with Form 1040X, file it and pay the tax as soon as possible to minimize interest and penalties. Generally, to get a refund, you must file Form 1040X within three years from the date you filed your original tax return or within two years of the date you paid the tax, whichever is later. Special rules may apply to certain claims. You can find these rules on the 1040X instructions, or take advantage of your free consultation at a TAX Solutions office.

You can track the status of your amended tax return for the current year on the IRS site. I recommend keeping a copy of your amended return/returns and checking the IRS site at least three weeks after filing using the “Where’s My Amended Return” tool on the IRS website.

Tax Law and Regulations can be a complicated labyrinth to the regular taxpayer. You may plug away for hours only to find yourself at a dead end. It may be wise to get an expert’s assistance. Maybe you are going to have a substantial liability and an Enrolled Agent can get it reduced by an Offer In Compromise. Perhaps you have a debt you cannot pay, and an Enrolled Agent can get it relegated to uncollectible status.

Perhaps the income the debt is based on is bogus and is not taxable income at all, and thus the debt is invalidated. There are many scenarios that require expert skill. One of my clients, for example, was not getting the full advantage of his deductions because he was subject to the Alternative Minimum Tax. One of his deductions was for State Income Tax. In amending his return, I had him not take that deduction, as it did not reduce his tax bill. Next year, when he gets a substantial state refund, it will not be taxable income. Had I taken the deduction, it would have been taxable income and he would have paid thousands of dollars on it in taxes the next year.

Filing an amended return may be aggravating experience to many a taxpayer. Sometimes it may result in substantial savings. If you feel confident in your tax expertise, you are welcome to go it alone.

I do not recommend this. Instead, here is what you do. Call or email us for your FREE consultation. One of our Enrolled Agents will review you situation and recommend solutions based on this. You can still go it alone, but chances are our expertise will save you money and worry. Our fees are a bargain compared to the money and aggravation you save.