Knowing your finances means fewer and fewer financial mistakes. However, tax returns are filed only once a year and it’s easy to make mistakes that lead to overpayments to the IRS. In that case, the filer can correct the mistake by filing her IRS Form 1040-X. Once the amended return is processed, the IRS will reduce the additional refund check to the overpaying taxpayer.
If you’ve ever made a mistake on your tax return, you may have a chance to correct it. We will explain how to file an amended return.
What is a tax return amendment?
Tax return amendment is the process of amending an already filed tax return. Most people choose to file a corrected tax return when they realize they can get more refunds based on the mistakes they made during the filing process. must file an amended return based on the IRS notice. These types of adjustments are usually subject to tax.
The IRS allows people to fix their mistakes (and receive overpayments) by filing with the IRS. Form 1040-X.
To correct problems on your tax return, you must generally file a corrected return within three years from the date you originally filed your return, or within two years from the date you paid your taxes for that year. If he paid his 2019 tax return on March 1, 2020, he must file an amended return by March 1, 2023.
Why do I need to amend my tax return?
The main reason to amend your return is to correct an error that affects your tax liability for a particular year. An amended return may result in an additional tax liability or a larger refund.
Some of the major issues that are likely to affect your outstanding balance include:
- Incorrect filing status.
- Falsely claiming the number of dependents.
- Changes in gross income (including deductions for business income if you forget to deduct legitimate business expenses).
- Claim a tax credit or deduction that you did not originally claim.
On rare occasions, the IRS issues changes to tax law so late (or retroactively) that you may need (or need to) amend your tax return. Over the last few years, this has become more and more common.
When do I file an amended tax return?
You have three years from the original filing date to file an amended return. You don’t want to sit around for months, but you also don’t want to submit too early.
The IRS warns that people expecting a refund from their original tax return should not file an amended return until they receive the expected refund. For example, if you are one of the unlucky few who are waiting for her tax refund from 2020, you should wait until you get your tax refund before fixing it.
How to amend your tax return
Just as we encourage you to use tax software to file your regular tax returns, we encourage you to use tax software to file your amended returns. The only way to file an amended tax return electronically is through a tax software product.
Each tax software has slightly different steps, but here are the general steps required to correct your tax return:
Step 1: Collect the correct documents
To file an amended tax return, you will need the original tax return and supporting documentation for the tax return change.To retrieve the original tax return, access the return through your tax software (usually accessible for a year or more), or Tax certificate from the IRS.
Aside from your original tax return, you will need documentation to support any changes you make to your tax return. For example, a parent claiming additional children as a result of a child custody settlement will require proof of the final settlement.
Persons claiming forgotten credits or deductions may require a receipt to support their claim. If you forget to claim part of your income, he may need a 1099-NEC, W2, or another 1099 source to support the change.
Step 2: Choose a filing method for the 1040-X
Theoretically, it is possible to manually prepare and mail a 1040-X. However, we recommend using a CPA or tax software to do the heavy lifting.
Filers who used CPA in the tax year being amended should consult with CPA on cost structure. He may be able to ask the CPA to file an amended return for free or at a limited cost, especially if the CPA is aware of the problem.
If you use tax software, we generally recommend using the software you used to file your tax return in the first place. For example, if you used FreeTaxUSA to file your 2019 tax return, you must use FreeTaxUSA to amend your 2019 tax return.
Step 3: Complete the 1040-X
To complete your amended return, you must follow the instructions for your chosen tax software product. These are instructions from some of the most popular tax companies.
Form 1040-X has only three main columns that must be completed. Column A shows the amount of 1040 that we originally reported. Column B shows the net change (both positive and negative) and C shows the correct amount.
Enter basic information about your income and deductions to easily calculate the correct amount of your refund.
Most major tax software provides step-by-step guidance to help filers accurately complete their amended returns. This software will ask you what has changed so that you can resubmit your information more accurately.
Step 4: Submit 1040-X with Supplemental Information
The IRS supports electronic filing using tax software products such as the software listed above. Filers can now electronically file returns for tax years 2019-2021. The IRS does not permit electronic filing of forms that are completed manually by the filer.
Those who wish to complete a 1040-X without tax software must mail their return and supporting documentation to the IRS. Those who choose to amend the return themselves should mail it to:
Ministry of Finance
Internal Revenue Service
Austin, Texas 73301-0215
If you are amending your return as directed by the IRS, please mail your return to the address specified in the official IRS notice.
Remember you have to file with the IRS Form 1040-X and a modified schedule or form that supports the change.
Step 5: Track Status
You can track the status of your modified returns using IRS websiteDuring peak tax season, amended returns may take longer. 16 weeks or more to the process. Unless there is something wrong with the return, you will eventually get a refund from the IRS.
It can be frustrating to find out that you left money on the table with the wrong tax. However, the IRS allows taxpayers to recover money that legally belongs to them. You probably don’t want to take the time to file your return on Saturday afternoon, but it could result in hundreds, possibly thousands, of additional refunds.
Filing is a hassle, but probably worth it for the money you are due.