When getting your tax records in order this year, you may have discovered a mistake on a prior tax return. We know, April 17th is over and you want to forget about taxes, but it may be to your advantage to file an amended tax return.
These are some common mistakes where filing an amended makes sense to correct:
- Your filing status – maybe you said Single when you could have filed as Head of Household with more favorable tax rates.
- Your dependents – Maybe you support an elderly parent and were entitled to an extra exemption, even if they did not live in your home
- Your total income – Maybe you got a corrected 1099 with lower income after you filed
- Your deductions or credits – Maybe you were entitled to an Education credit or Energy credit, or you didn’t take all employee business expense deductions you could have.
Most people file amended returns because they anticipate a refund, and you may be able to get money back from the IRS in all of the above examples. Of course, there are cases where you owe additional money, but (as we’ve said before) the IRS will find you, so you will limit any penalties & interest the sooner you correct your tax return.
You will need to file a Form 1040X, a separate one for each year in question. Generally you must file a 1040X within three years from the date of filing your original return, or within two years from the date you paid the tax, whichever is later. If changes involve another schedule or form, you must attach that schedule to the amended return (Note: we recommend sending a full 1040 and all supporting schedules with the 1040X, as you would have reported if you knew about the changes when you originally filed). If you live in a state with income tax, you likely will also need to file an amended state income tax return.
You may have found a mistake in this year’s tax return soon after you’ve filed and are entitled to a larger refund. In cases like this, the IRS can get confused with your paperwork if you send an amended return before they’ve processed you through “the system”. We recommend waiting until your original refund check is in your hand before sending in the 1040X.
Some people are hesitant to file an amended return, even if means getting a considerable amount of money back. They are afraid you will be scrutinized by the IRS or get on their bad side. You should never take tax return filing obligations for granted; your tax returns should be accurate as you can make it, whether on the original or a corrected return. Amending taxes can be tricky. This is something you’ll want to go over with a trusted tax advisor.
