What is an amended tax return?
Do you know what is an amended tax return? An amended tax return is a form that can be filed to correct errors in a tax return for a previous year. An amended return can be used to correct errors or claim a refund. An amended return can be filed in cases of misreported earnings, tax credits. However, amendments are not required for mathematical errors. The IRS will automatically correct such errors during tax returns processing.
KEY TAKEAWAYS
- An amended return is a form that's filed to correct a tax return for a previous year.
- The form 1040-X is available online at the IRS. This form can be used to file amended returns.
- Individual taxpayers may file an amended return if they have changed their filing status, their dependents, or incorrectly claimed tax credits, deductions, or income.
- The statute of limitations for tax refund checks is three years.
.
Who should file an amended return?
Taxpayers are required to file taxes for the preceding tax year every year. The government may accept a tax return submitted by taxpayers. Taxpayers might realize they made mistakes in filling out their tax forms. This is where the Internal Revenue Service can help.
Even after the tax filing deadline has passed, an amended tax return may be filed.
Some errors do not require that the form be amended. The IRS will correct any mathematical errors when the initial tax returns are submitted for processing. The IRS will adjust any refund due and bill any additional tax liability due to the taxpayer. 1 If an individual does not include the required schedule or form in their original tax return, the IRS may send them a letter asking that they send the missing information to one of their offices.
.
When is it appropriate to file an amended return?
If:
- The taxpayer's filing situation for that tax year was changed or incorrectly entered. If an individual file as a single, but gets married on the last day, they will need to amend their returns by filing taxes under the appropriate status - married filing jointly or married filing separately.
- It is incorrect to claim dependents. If a taxpayer must add or remove dependents, an amended return is required. A couple might have included a baby born in January before taxes were filed in April for the previous year's tax returns. Because they were not born before the end of the calendar year, the baby cannot be included in the previous year's tax returns.
- Tax credits or deductions weren't claimed correctly. The taxpayer might have realized they are eligible for a credit/deduction and will want to amend their return to reflect this.
- Incorrect income was reported for the tax year. To report additional income, a taxpayer may file an amended return if they receive additional tax documents (e.g., a Form 1099 or K-1) after the tax deadline.
- Legislation changes can affect the deductibility of some expenses. Sometimes legislation may be passed after a taxpayer files a return that changes the deduction of certain expenses. The Tax Cuts and Jobs Act 2017 made it possible to extend the deduction for private Mortgage Insurance (PMI). This was the reason why the deduction expired on December 31, 2017. In December 2019, the Further Consolidated Appropriations Act was signed into law, extending the deduction to Dec. 31, 2020. This allowed the deduction to be available for the 2019-2020 tax years, and retroactively for the 2018 tax year.
- A natural disaster can result in tax relief that reduces the taxpayer's tax liabilities. This is a common problem for taxpayers that have been affected by natural disasters, particularly in the latter part of the tax year. Although the government offers tax relief to those who are affected by natural catastrophes, it may take longer for legislation to be completed than the usual tax season window. Taxpayers are responsible for paying their entire tax liability when it is due. To claim any refund due to them for natural disaster tax relief, you can file an amended return if legislation is changed.
- A taxpayer discovers they owe more tax than they have paid. An amended return can be filed with the IRS to avoid being penalized by the government.
- .
How to amend a tax return
The three columns of Form 1040-X are A, B, and C. Column A records the tax figure reported on the original or last-amended tax forms. Column C will require the taxpayer to enter the correct or adjusted number. The difference between A and C will be reflected in the column. Tax returns can be adjusted to reflect a balance due, a refund, or no tax change. In a section on the back of Form1040-X, the taxpayer must also explain the changes made and the reasons they made them.
.
Advantages and Disadvantages of an Amended Tax Return
However, the IRS recently began accepting electronic filings of amended tax returns for tax years 2019 and 1040-X. The taxpayer must submit the completed form by hand to the IRS Service Center. The IRS manually processes amended tax returns. This can take up to 16 weeks, or more if the taxpayer does not sign the form, is incomplete, or contains errors.
However, there is a 3-year statute of limits that applies to the issuing of tax refund checks. Taxpayers must file all amended returns that result in tax refunds within three years of the date they filed their original tax return. A taxpayer can file an amended return to account for extra income or overstated deductions at any time.
Pros
- Corrections can be made to an amended tax return.
- Even if you haven't filed for it, you can still claim the refund.
- Correct any circumstances that have changed since your original filing.
.
Cons
- For all tax years, Form 1040-X can't be electronically filed.
- The processing of an amended return may take up to 16 weeks.
- For tax refunds, there is a three-year statute of limitations.
.
What is an amended return tax?
Modifying something is to make it different. This is exactly what you do when filing an amended tax return. To reflect new information, you amend your tax return.
You will need to complete additional forms when filing an amendment. You will need to file an amended 1040X tax return if you must alter your filing status, income, deductions, or credits.
The 1040X provides both your original and your new numbers, along with a calculation of any difference. You will need to have the original copy of your returns and any new information to file an amended return.
.
What are the most common reasons for an amended tax return being filed?
There is no perfect person, so mistakes will happen. You can correct the errors by filing an amendment. These are just a few examples of situations that may require you to file an amendment:
- After you have filed your taxes, you received another W-2 or income statement.
You received a W-2 after you have filed your taxes. This form was for a job that you only held for a few weeks. Although the amount listed on the form is only a few hundred dollars it can still impact your tax. The Oder, you got an interesting statement about a bank account that you forgot about.
The IRS requires that you declare all income earned for the current year. It is best to file an amended return in this case.
Employers and businesses must send income statements, such as W-2s or 1099-MISC, by law. You should ensure that you have all income statements to file early if you intend on filing.
.
- You didn't claim a credit/deduction you were eligible for
You can lower your tax bill by taking advantage of several credits and deductions above the line (ones that you don't need to itemize). You could be wasting money if you don't claim one if you are eligible. You could be eligible to claim the money by filing an amended tax return.
If you have paid college tuition in the tax year, for example, you may be eligible to receive the American opportunity tax credit and the lifetime learning credit. You will need to amend your 1040 to claim your educational credits.
- .
- Your parents would like to claim you as a dependent in their taxes. However, you have already claimed a personal exemption.
You claimed a personal exemption and you filed your taxes before your parents could file. Your parents want you to be dependent on your taxes. You didn't check the box on your 1040 that allows you to be claimed as dependent on another person's taxes when you filed your taxes.
Your parents can no longer claim you as a dependent on your taxes. You will need to amend your agreement that your parents are allowed to claim you as a dependent on their taxes.
- .
- Your employer made an error on your W-2. They had to send you a corrected document.
Companies make mistakes too. The payroll department would have to send you a corrected W-2C if it made an error in your W-2. The W-2C will show the previous information alongside the correct information. This will let you know what you need to change. You will need to amend your return if the numbers have changed, or you filed it using an incorrect W-2.
.
- You didn't report income from a side job
It was a side job that you didn't know you needed to declare on your federal income tax returns. After you filed your taxes, you received a CP2000 notice by the IRS advising you that the IRS had different information than what you had reported on your tax return. This could indicate that you have underpaid taxes.
This notice lists the side gig income you have not reported. If all information on the CP2000 is correct you don't have to amend your return unless there are additional income, credits, or expenses.
You agree to the notice, but you also have expenses that must be deducted. You will need to file an amendment.
Fill out a Schedule B for your side gigs and submit a 1040X to deduct the expenses. Also, add "CP2000" to your amended return. Attach it to the response form and mail it to IRS.
- .
- The wrong status was used
You were married in November. Your spouse assumed that you would need to file separate returns because you were single most of the year. The IRS will consider you married for the whole year if your spouse marries before Dec 31st of the tax year.
To change your filing status, you will need to file an amendment. You may want to file an amended return due to the tax benefits of marriage, such as a higher standard deduction.
- .
- Someone else claimed your child in their tax return
The IRS refuses to accept your tax return. Your ex or someone else has already claimed your child as a dependent.
If you wish to be eligible for tax breaks such as the child tax credit, you cannot claim your child jointly with your ex. Although you may have a custody or divorce agreement, the IRS considers the parent who has the right to claim the child as dependent on the parent with whom the child lived more than half the year. Also, the parent who provided the most support for the child is the one who can claim the child as a dependent.
If you and your ex agree that you should claim your child's child as a dependency, your ex will have to file an amended tax return to make your child no longer a dependent. If you and your ex can't reach an agreement, the IRS will use tie-breaker rules to determine who gets the child.
.
Is there a deadline for modifying a return?
The IRS recommends that you file Form 1040X to amend your tax return within three years of when you filed your original tax returns or two years after the date you pay the tax. Make sure you enter the year that you wish to amend on Form 1040X.
The IRS could not allow you to amend your return if you miss the deadline. This could mean that you may lose any tax credits, deductions, or tax benefits that you would be eligible for. The IRS may suspend the period for refunds until a taxpayer is financially disabled due to a mental or physical impairment.
.
What is the best way to file an amended return?
You must file Form 1040X to amend your tax return. In the summer of 2020, electronic 1040X forms were accepted by IRS. To amend your tax return, you used to have to mail a 1040X form.
Online tax filing services may help you to complete a 1040X, which you can print and mail. You can fill out an amended return if your original return was filed using Credit Karma Tax's free filing service. You can then print the form and send it off.
Here are some tips to help you file a paper 1040X if you are used to filing your tax returns.
Make sure you sign and date the form.
Attach all required forms to support your amendment to 1040X. For more information on how to build your return, see the 1040X instructions. Forms must be attached in a particular order.
Be sure to explain why you are changing the return on Form 1040X Part III.
You will need to print the 1040X if you are using software or online service. Printing a second copy for your records is a good idea.
You will need to file separate 1040Xs for each year if you have to amend multiple years' returns. The IRS Where's My Amended Return tool allows you to check the status online.
.
Bottom line
An amended tax return is like a second chance to get any tax benefits that you missed the first time. It could also result in you owing more tax.
Knowing the circumstances that could trigger an amended return can help you avoid making a mistake later.
Related article:
What is an amended tax return?
Do you know what is an amended tax return? An amended tax return is a form that can be filed to correct errors in a tax return for a previous year. An amended return can be used to correct errors or claim a refund. An amended return can be filed in cases of misreported earnings, tax credits. However, amendments are not required for mathematical errors. The IRS will automatically correct such errors during tax returns processing.
KEY TAKEAWAYS
- An amended return is a form that's filed to correct a tax return for a previous year.
- The form 1040-X is available online at the IRS. This form can be used to file amended returns.
- Individual taxpayers may file an amended return if they have changed their filing status, their dependents, or incorrectly claimed tax credits, deductions, or income.
- The statute of limitations for tax refund checks is three years.
.
Who should file an amended return?
Taxpayers are required to file taxes for the preceding tax year every year. The government may accept a tax return submitted by taxpayers. Taxpayers might realize they made mistakes in filling out their tax forms. This is where the Internal Revenue Service can help.
Even after the tax filing deadline has passed, an amended tax return may be filed.
Some errors do not require that the form be amended. The IRS will correct any mathematical errors when the initial tax returns are submitted for processing. The IRS will adjust any refund due and bill any additional tax liability due to the taxpayer. 1 If an individual does not include the required schedule or form in their original tax return, the IRS may send them a letter asking that they send the missing information to one of their offices.
.
When is it appropriate to file an amended return?
If:
- The taxpayer's filing situation for that tax year was changed or incorrectly entered. If an individual file as a single, but gets married on the last day, they will need to amend their returns by filing taxes under the appropriate status - married filing jointly or married filing separately.
- It is incorrect to claim dependents. If a taxpayer must add or remove dependents, an amended return is required. A couple might have included a baby born in January before taxes were filed in April for the previous year's tax returns. Because they were not born before the end of the calendar year, the baby cannot be included in the previous year's tax returns.
- Tax credits or deductions weren't claimed correctly. The taxpayer might have realized they are eligible for a credit/deduction and will want to amend their return to reflect this.
- Incorrect income was reported for the tax year. To report additional income, a taxpayer may file an amended return if they receive additional tax documents (e.g., a Form 1099 or K-1) after the tax deadline.
- Legislation changes can affect the deductibility of some expenses. Sometimes legislation may be passed after a taxpayer files a return that changes the deduction of certain expenses. The Tax Cuts and Jobs Act 2017 made it possible to extend the deduction for private Mortgage Insurance (PMI). This was the reason why the deduction expired on December 31, 2017. In December 2019, the Further Consolidated Appropriations Act was signed into law, extending the deduction to Dec. 31, 2020. This allowed the deduction to be available for the 2019-2020 tax years, and retroactively for the 2018 tax year.
- A natural disaster can result in tax relief that reduces the taxpayer's tax liabilities. This is a common problem for taxpayers that have been affected by natural disasters, particularly in the latter part of the tax year. Although the government offers tax relief to those who are affected by natural catastrophes, it may take longer for legislation to be completed than the usual tax season window. Taxpayers are responsible for paying their entire tax liability when it is due. To claim any refund due to them for natural disaster tax relief, you can file an amended return if legislation is changed.
- A taxpayer discovers they owe more tax than they have paid. An amended return can be filed with the IRS to avoid being penalized by the government.
- .
How to amend a tax return
The three columns of Form 1040-X are A, B, and C. Column A records the tax figure reported on the original or last-amended tax forms. Column C will require the taxpayer to enter the correct or adjusted number. The difference between A and C will be reflected in the column. Tax returns can be adjusted to reflect a balance due, a refund, or no tax change. In a section on the back of Form1040-X, the taxpayer must also explain the changes made and the reasons they made them.
.
Advantages and Disadvantages of an Amended Tax Return
However, the IRS recently began accepting electronic filings of amended tax returns for tax years 2019 and 1040-X. The taxpayer must submit the completed form by hand to the IRS Service Center. The IRS manually processes amended tax returns. This can take up to 16 weeks, or more if the taxpayer does not sign the form, is incomplete, or contains errors.
However, there is a 3-year statute of limits that applies to the issuing of tax refund checks. Taxpayers must file all amended returns that result in tax refunds within three years of the date they filed their original tax return. A taxpayer can file an amended return to account for extra income or overstated deductions at any time.
Pros
- Corrections can be made to an amended tax return.
- Even if you haven't filed for it, you can still claim the refund.
- Correct any circumstances that have changed since your original filing.
.
Cons
- For all tax years, Form 1040-X can't be electronically filed.
- The processing of an amended return may take up to 16 weeks.
- For tax refunds, there is a three-year statute of limitations.
.
What is an amended return tax?
Modifying something is to make it different. This is exactly what you do when filing an amended tax return. To reflect new information, you amend your tax return.
You will need to complete additional forms when filing an amendment. You will need to file an amended 1040X tax return if you must alter your filing status, income, deductions, or credits.
The 1040X provides both your original and your new numbers, along with a calculation of any difference. You will need to have the original copy of your returns and any new information to file an amended return.
.
What are the most common reasons for an amended tax return being filed?
There is no perfect person, so mistakes will happen. You can correct the errors by filing an amendment. These are just a few examples of situations that may require you to file an amendment:
- After you have filed your taxes, you received another W-2 or income statement.
You received a W-2 after you have filed your taxes. This form was for a job that you only held for a few weeks. Although the amount listed on the form is only a few hundred dollars it can still impact your tax. The Oder, you got an interesting statement about a bank account that you forgot about.
The IRS requires that you declare all income earned for the current year. It is best to file an amended return in this case.
Employers and businesses must send income statements, such as W-2s or 1099-MISC, by law. You should ensure that you have all income statements to file early if you intend on filing.
.
- You didn't claim a credit/deduction you were eligible for
You can lower your tax bill by taking advantage of several credits and deductions above the line (ones that you don't need to itemize). You could be wasting money if you don't claim one if you are eligible. You could be eligible to claim the money by filing an amended tax return.
If you have paid college tuition in the tax year, for example, you may be eligible to receive the American opportunity tax credit and the lifetime learning credit. You will need to amend your 1040 to claim your educational credits.
- .
- Your parents would like to claim you as a dependent in their taxes. However, you have already claimed a personal exemption.
You claimed a personal exemption and you filed your taxes before your parents could file. Your parents want you to be dependent on your taxes. You didn't check the box on your 1040 that allows you to be claimed as dependent on another person's taxes when you filed your taxes.
Your parents can no longer claim you as a dependent on your taxes. You will need to amend your agreement that your parents are allowed to claim you as a dependent on their taxes.
- .
- Your employer made an error on your W-2. They had to send you a corrected document.
Companies make mistakes too. The payroll department would have to send you a corrected W-2C if it made an error in your W-2. The W-2C will show the previous information alongside the correct information. This will let you know what you need to change. You will need to amend your return if the numbers have changed, or you filed it using an incorrect W-2.
.
- You didn't report income from a side job
It was a side job that you didn't know you needed to declare on your federal income tax returns. After you filed your taxes, you received a CP2000 notice by the IRS advising you that the IRS had different information than what you had reported on your tax return. This could indicate that you have underpaid taxes.
This notice lists the side gig income you have not reported. If all information on the CP2000 is correct you don't have to amend your return unless there are additional income, credits, or expenses.
You agree to the notice, but you also have expenses that must be deducted. You will need to file an amendment.
Fill out a Schedule B for your side gigs and submit a 1040X to deduct the expenses. Also, add "CP2000" to your amended return. Attach it to the response form and mail it to IRS.
- .
- The wrong status was used
You were married in November. Your spouse assumed that you would need to file separate returns because you were single most of the year. The IRS will consider you married for the whole year if your spouse marries before Dec 31st of the tax year.
To change your filing status, you will need to file an amendment. You may want to file an amended return due to the tax benefits of marriage, such as a higher standard deduction.
- .
- Someone else claimed your child in their tax return
The IRS refuses to accept your tax return. Your ex or someone else has already claimed your child as a dependent.
If you wish to be eligible for tax breaks such as the child tax credit, you cannot claim your child jointly with your ex. Although you may have a custody or divorce agreement, the IRS considers the parent who has the right to claim the child as dependent on the parent with whom the child lived more than half the year. Also, the parent who provided the most support for the child is the one who can claim the child as a dependent.
If you and your ex agree that you should claim your child's child as a dependency, your ex will have to file an amended tax return to make your child no longer a dependent. If you and your ex can't reach an agreement, the IRS will use tie-breaker rules to determine who gets the child.
.
Is there a deadline for modifying a return?
The IRS recommends that you file Form 1040X to amend your tax return within three years of when you filed your original tax returns or two years after the date you pay the tax. Make sure you enter the year that you wish to amend on Form 1040X.
The IRS could not allow you to amend your return if you miss the deadline. This could mean that you may lose any tax credits, deductions, or tax benefits that you would be eligible for. The IRS may suspend the period for refunds until a taxpayer is financially disabled due to a mental or physical impairment.
.
What is the best way to file an amended return?
You must file Form 1040X to amend your tax return. In the summer of 2020, electronic 1040X forms were accepted by IRS. To amend your tax return, you used to have to mail a 1040X form.
Online tax filing services may help you to complete a 1040X, which you can print and mail. You can fill out an amended return if your original return was filed using Credit Karma Tax's free filing service. You can then print the form and send it off.
Here are some tips to help you file a paper 1040X if you are used to filing your tax returns.
Make sure you sign and date the form.
Attach all required forms to support your amendment to 1040X. For more information on how to build your return, see the 1040X instructions. Forms must be attached in a particular order.
Be sure to explain why you are changing the return on Form 1040X Part III.
You will need to print the 1040X if you are using software or online service. Printing a second copy for your records is a good idea.
You will need to file separate 1040Xs for each year if you have to amend multiple years' returns. The IRS Where's My Amended Return tool allows you to check the status online.
.
Bottom line
An amended tax return is like a second chance to get any tax benefits that you missed the first time. It could also result in you owing more tax.
Knowing the circumstances that could trigger an amended return can help you avoid making a mistake later.
Related article:
How to get from SNA to LAX