Amending Tax Returns

TABLE OF CONTENTS:

Key takeaways

  • For some cases of form 1040-X, filing an amended tax return electronically is possible.

  • You will need to fill out separate Forms 1040-X if you are preparing more than one year’s worth of returns.

  • You must file Form 1040-X if you want to receive money back within three years of your original tax return filing or two years after paying the tax.

  • The benefits of using an amended tax return are numerous, especially for previous tax years.

  • After receiving your amended tax return, the IRS will send you a tax amendment/refund if you are due one or a ‘filing status changed’ notification.

  •  You can’t e-file Form 1040X. If you are filing a 2020 return, you can only e-file Form 1040 x electronically unless your Social Security number or the ‘status of filing’ has changed.

  • Modifying your federal tax return may also require you to modify your state return.

  • Find out if your preparer charges extra for an amended filing. It would help if you did not assume that a tax-preparer will make any changes to your return or pay additional taxes, interest, or penalties for a mistake.

  • A tax amendment can take up to three weeks to appear in the IRS system.

  • You can file an amended tax return if you are a business owner.

  • If you find out after you have already filed that you forgot to include income on your return (for example, from a Form W-2 or 1099), or if you get a corrected information statement that has different amounts of income or withholding, you will need to get an amended return to fix the error, and might pay additional tax.

  • If you don’t revise your return and you wind up owing more money in taxes, the IRS will most likely give you a CP2000 notice, which may come with severe penalties.

  •  You don’t need to amend your return if you make math mistakes; the IRS will correct your filing errors.

Amending your return

Let’s start from the top,

Liabilities are accrued when a taxpayer has failed to file an income tax return or when the IRS files a Substitute for Return (“SFR”) or “force files” for the taxpayer. 

You have to send different 1040 return files by separate forms to the IRS for the correct years and prior years to qualify for amendment.

The IRS will file the form 1040-X return on the taxpayer’s behalf, giving them zero deductions, exaggerating the liability, and placing the taxpayer in the highest bracket possible. Most people would not file this way, and this may cause large balances for every year an SFR is filed. We can help by amending IRS returns accurately, which, at times, can wipe out the debt entirely and, in some cases, will even result in a net return to the taxpayer. 

Form 1040-X is used to correct errors or remove information from your original federal tax return. This is called an Amended Tax Return, a correction to an original federal tax return.  

Your return for form 1040 x can only be filed by paper return, not by e-filing. It is recommendable, however, to ensure that a scanned e-filing version is available, to ensure filed tax returns from the current and prior tax year are stored both physically and on the cloud. When your required forms are electronically filed, you also reduce the amount of time you need to find your document when the IRS wants to see your filed form 1040. For other cases of form 1040 x, there is the possibility of filing an amended tax return electronically.

What is an amended tax return?

What is an amended tax return? 

IRS Form 1040-X This is the form that you use to correct or amend your tax return for the current tax year. You can show the IRS the changes you made to your amended forms, as well as the correct tax amount, which could make you eligible for a tax refund.

You will need to fill out separate Forms 1040-X if you are preparing more than one year’s worth of returns. Also, you will need to include any schedules or forms affected by the changes. The IRS began allowing taxpayers to have more responsibility in the process of fighting their federal income tax return, and decreasing tax liability.

You must file Form 1040-X if you want to receive money back within three years of your original filing or two years after paying the tax. 

Sometimes you may catch an error earlier than the IRS, or you may receive revised tax documents after having already filed. For example, if your employer sends you, a revised W-2. Don’t send a letter to IRS stating that you forgot to include your money influx of certain situations. 

In 2020, taxpayers were able to electronically file Form 1040-X. You can now file amended 1040/SR forms online for tax years 2019, 2020, and 2021. You must file the amended federal return by mail if you must amend an older return (2018 and earlier). The tax forms, or IRS form due date for the tax refund of the current tax year will be opening in 2023. The form 1040/SR forms filed electronically had schedules affected at the IRS, and allows for a speedier assessment of taxes.

What are some of the benefits of filing an amended IRS return?

What are some of the benefits of filing an amended IRS return? 

The benefits of using an amended tax return are numerous, believe it or not. 

  • Claim a federal return – You can take a deduction that you have not taken 

  • Additional salary and withholding reporting – You might be able to redeem an additional amount 

After receiving your return, the IRS will send you an amendment/refund if you are due one or a change in filing status notification. Send the IRS the amount due along with the 1040 x form if you owe taxes. The IRS will bill you if you owe interest, a penalty, or both. In addition, if you have made a mistake there is still the possibility to change amounts previously adjusted in the ‘report additional income’. Moreover, in some cases, it might be wise to consider getting a tax expert to help decrease your taxable income or avoid penalties. While the IRS website offers sufficient information, it is also slightly complicated for the average taxpayer, causing some taxpayers to make clerical errors. The IRS’s system is something that professionals are very experienced with, and they might be able to help you avoid additional interest charges, bad debts, and math errors.

What should you look for in the 1040X Form?

What should you look for in the 1040X Form?

It’s a good idea to go through your original return before deciding to amend it. There are certain areas that may have been overlooked.

  • Deductions 

  • Credits 

  • Exemptions 

  • Income 

  • Withholding 

This could result in you owing less or receiving a larger refund. Also, keep in mind that you should use column B (within form 1040) if you received any interest during the year. For more information, the IRS has a clear explanation of what to do when filing column b.

What should you include in your amended return? 

What should you include in your federal income tax return? 

You might be wondering what you should include in a corrected return after you have filed a 1040 x return. These items will be required to support the modifications to your form 1040 x return. 

  • A copy of the federal deposit slip 

  • Unsubmitted 1099 or W-2 forms or schedules previously not submitted 

  • Additional supporting documentation, schedules, or forms substantiating the amended return 

You can either e-file your amended return forms or schedules or download a paper Form 1040 x at www.irs.gov. If you prefer to mail the paper version, you will need to send it in through a separate envelope to qualify for an additional refund.

Can I amend my return if I have already filed it for this year to add dependents?Can I add a dependent from a previous year? 

You can file an amended return for this year. Add dependents to any one of your past three years’ returns, or within two years from the date, you paid your obligations to the IRS. You can file after this deadline if you have a reduced amount of tax due. You can add or remove qualifying dependents by printing and mailing amended tax returns to the IRS for each year. You can’t e-file Form 1040X. If you are filing a 2020 return, you can only e-file Form 1040 x electronically unless your Social Security number has been changed or the status of your filing has changed. 

Can you file your own Amended Tax Returns?   A person with a simple tax situation and minor changes may be able to file an amended return on their own. Much major tax software includes modules that allow you to file an amended return. Many tax preparers will also file amended returns.  Note: Modifying your federal tax return may also require you to modify your state tax returns.  Find out if your preparer charges extra for an amended tax return  You should not assume that a human tax preparer will make any changes to your tax return or pay extra taxes, interest, or penalties for a mistake. You'll most likely be charged for extra work if you don't give correct information to the preparer.  If the mistake is made by the preparer, the terms of your client agreement may determine who pays for the amended tax return. 

Can you file your Amended Tax Return Yourself?

A person with a simple situation and minor changes may be able to qualify for amended returns on their own. Much major software includes modules that allow you to file for amended returns. Many professional preparers will also file amended returns. The IRS considered filed forms or schedules to be eligible for a state tax refund, and it’s important for individual taxpayers to assess their eligibility for getting an amended state return.

  • Modifying your federal tax return may also require you to modify your state tax return.

Find out if your preparer charges extra for an amended tax return. 
You should not assume that a human tax-preparer will make any changes to your tax return or pay extra taxes, interest, or penalties for a mistake. You’ll most likely be charged for extra work if you don’t give the correct information to the preparer. 

If a mistake was made by the tax preparer, the terms of your client’s agreement will determine who will pay for the amended tax return. We’d advise you to keep a clear administration of the filings for the specific tax year. Keeping your administration up-to-date will help you assess your tax liability in the current tax year, and makes it easier for you to see whether you qualify for itemized deductions, form 1040 refunds. If this is too much work, we suggest contacting a tax expert at Idealtax. We will be able to help you file form 1040 x for the necessary tax year. In addition, we can process amended returns, and help you get a state tax return.

Keep your eyes peeled for thecalendar 

The IRS usually audits returns for the last 3 tax years. However, there are some exceptions. It might seem tempting to wait to see if the IRS will catch your mistake, but it may be more cost-effective to admit it sooner than later. 

The IRS assesses interest and penalties for tax liabilities that are not paid by the due date. The IRS charges interest and penalties for liabilities that are not corrected within the original due date of the tax payment. 

Where is my amended return? 

You can track the progress of your amended federal return with the IRS’s online tracking tool
The IRS can also track the progress of your amended return. 
An amended return can take up to three weeks to appear in the system. It may also take up to 16 weeks for it to be processed. 
If nothing happens after 16 weeks, you can call the IRS or ask someone at your local tax office for assistance in researching your amended return. 

Deadline for submitting Form 1040X 

You can file an amended return if you are a business owner. This is for the year in which you had a net operating loss (NOL). The amended return must be filed within three years from the due date for the NOL return. 

The IRS typically has three years to assess additional returns. For fraud and significant underreporting, they also have the right to allow assessment for longer periods.

Foreign tax credits

If you paid or accrued foreign taxes to a foreign country or U.S. possession and are subject to U.S. tax on the same salary, you may be able to take either a credit or an itemized deduction for those taxes.

File Form 1116, Foreign Tax Credit, to claim the credit if you are an individual, estate or trust, and you paid or accrued certain foreign taxes to a foreign country or U.S. possession.

Corporations file Form 1118, Foreign Tax Charge—Corporations, to claim a foreign tax charge, even in the case of net operating losses.

The Main Justifications for Submitting a tax amendment

If you find out after you have already filed that you forgot to include income on your return (for example, from a Form W-2 or 1099), or if you get a corrected information statement that has different amounts of income or withholding, you will need to get an amended return to fix the error.

This is the case regardless of whether or not you are due a more significant tax refund or will have a higher tax liability. If you don’t revise your return and you wind up owing more money in taxes, Uncle Sam will most likely give you a CP2000 notice, which may come with severe penalties. To avoid such penalties, we’d recommend checking your previously filed tax return and using form 1040 x for the current year to check your eligibility for tax returns.

When not to file an amended tax return

Amending Tax Returns Q&A

Why would you file an amended tax return?

If you have reported incorrect information on your original return, like filing status, dependents, total earnings, deductions, or credits, you should amend that. You don’t need to amend your return if you make math mistakes; the IRS will correct your filing errors.

Do you need to file a modification for your tax refund? 

We can help you decide if you should make a tax change, or if you’re eligible for a tax break. Just call us at (888) 224-3004

If you need help with your federal tax return, or any of your previously filed taxes or schedules, we’re here to help. Filing for your tax amendment, online, or in paper form, takes a significant amount of time, and in order to avoid penalties and interest, it is vital to act swiftly. A professional can help figure out the status of your state tax liability.

Do you need to file a tax modification?  

Do you need to file a tax modification? 

We can help you decide if you should make a tax change. Just call us at (888) 224-3004

Ideal Tax Solution Representation

Ideal Tax Solution has the experience and knowledge to handle the most serious of tax audits. Our expert Tax Attorneys and Enrolled Agents will negotiate with the IRS on your behalf and ensure that your taxpayer rights are protected and that the IRS auditor is playing on a level field. Call us today to discuss how we can develop a strategy that will allow you to address the audit and resolve it with better than acceptable results.
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