8 Simple Steps For Amending A Tax Return

Accountancy Resources

8 Simple Steps For Amending A Tax Return

Tax Author: Admin


‘Death and Taxes’ as the phrase goes, are the two things in life we can always count on. As tax laws evolve and our personal lives change, the amount of taxes to be paid, refunded and filed literally changes from year to year. Invariably, in a lifetime, there will be more than one occasion that a correction will need to be made on your taxes, whether it benefits you or not. The truth is, having your taxes correct and the IRS off your back is always a benefit. While filing taxes can be overwhelming, amending a return is simpler than you might think with a few key actions:

1)      Anticipate – Go ahead and assume at some point you are going to need to amend a tax return and be prepared.

The more organized your documents, the easier the amendment will be to file. You will need your original 1040 filing in order to begin the process.

2)      Consider Delegating – A CPA or Tax preparation agency is more than happy to do your amendment for a fee. If the amendment will potentially result in a tax refund, the fee may be well worth it to have a professional look at your overall return for additional opportunities.

3)      Know When to Amend – An amended return is needed for:

  • Updates in your filing status
  • Correcting your reported income from a W2, 1099, etc.
  • Correcting Additional Withholding amounts from a W2, 1099, etc.
  • Adding or removing dependents
  • Claiming or Removing tax credits
  • Changing deductions (above the line, itemized, or standard)
  • Updating personal exemptions

4)      Know When NOT to Amend – You DO NOT need to file an amendment for mathematical errors or missing attachments – such as a W2. The IRS will correct any math issues and contact you if there is any additional paperwork needed.

5)      Know How – to file the paperwork properly:

  • Use FORM 1040X Amended U.S. Individual Income Tax Return, to amend tax returns originally filed with forms, 1040, 1040A, or 1040EZ
  • The form has to be filed via paper
  • There is a three-year window to file an amendment
  • If you have multiple amendments, make sure you file a different form for each year and mail each in its own envelope
  • You will need to fill out an updated 1040 to correctly fill out the 1040X
  • Include all updated schedules and supporting documentation

6)      Be Concise – Form 1040X has an explanation box that is required to explain the change. The IRS only needs specific information explaining the change such as “received and updated 1099 of May 1st, xxxx). The IRS is not interested in how your boyfriend or girlfriend dumped you and in the emotional distress you misplaced documents. A much better way to explain the situation is “additional form XYZ not previously reported”.

7)      Manage the Money – For an additional refund, cash the original check from your taxes while waiting for the amendment to be processed.  If you owe additional tax, try to pay before the due date to limit penalty charges.

8)      Don’t forget the State – If you need to adjust your federal tax return, chances are, you also need to adjust your state. Be proactive and check out your state’s guidelines.

The IRS will review the amendment closely and inform you if they have any questions. While filing a tax amendment can seem daunting, it is truly just another fact of life and part of being in modern society. The important thing to remember is that it is better for you to file an amendment than to wait to see if the IRS “catches” something. You might miss out on a refund or owe taxes that are now financially inconvenient. If the sure things in life are death and taxes, isn’t it better to deal with taxes?