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Posted by Freddie Cook, CPA

Amending Last Year's Tax Return: How, When and Why to File One

Amending Last Year's Tax Return: How, When and Why to File One

An amended income tax return corrects errors in a federal income tax return. Taxpayers use the IRS 1040X form to file an amended tax return. You might be wondering, "Where is my amended return?" Well, not to worry as there is good news: you can track your progress on the IRS website or by calling the IRS.

Here is how to file to amend last year's tax return with the IRS, when your return needs amendment, and the rules that apply to file for an amendment.

File and IRS 1040X form to create an amended tax return

    •    The IRS 1040X is a form that must be completed to modify or correct a tax return. In this form, the changes to the tax return and the exact amount of tax are indicated by the IRS.

    •    If you are to file Form 1040X with a view to receiving a refund, you generally must do so within three years of filing the initial return or within two years of paying the tax, depending on the following period.

    •    You can end up identifying an error before the IRS does, or new tax documents can be obtained after you have successfully filed. For example, if your employer sends you a revised W-2. In either or both of these cases, you don't have to send a letter to the IRS explaining what you noticed. All that is needed of you is to fill out Form 1040X.

Don't panic about an error on your tax return

You do not have to panic if you notice any error(s), no IRS official will show up on your door asking you why you forgot to add 1 or subtract 2. If the IRS detects a mathematical error on the return, they will try to solve the problem and move on. In a situation where that is not the case, the IRS will send a letter explaining what they have noticed and can request for more information. Be sure to respond to their query.

You can file an amended tax return yourself

    •    Individuals dealing with simple tax situations and minor changes can submit an amended tax return themselves.

    •    Many of the significant tax programs already include forms with modified tax returns. Also, many tax preparers want to file amended returns.

    •    And don't forget: amending the federal income tax return may imply the need also to amend the state income tax return.

Enquire if your Tax Preparer charges for Amended Tax Return

    •    If you have used a tax preparer, do not assume that they will amend the tax return for free or accidentally pay for the additional interest, taxes, or fines. If you forgot to give the instructor or provided incorrect information, for example, you may have to pay for extra work.

    •    If the fault is the fault of the preparer, who pays a modified tax return may depend on the formulation of the contract with the client.

Always keep an eye on the calendar

    •    In general, IRS audits only returns from the three past years, although there are notable exceptions. So while it may be fascinating to wait and see if the IRS will catch you in error, it can be cheaper to fess up sooner than later.

    •    The IRS invoices interest and penalties for tax obligations in effect on the date of the initial payment of the tax. Therefore, the longer you wait to correct an error, the more expensive the error can be.

IRS 1040X form on paper, not online

    •    Form 1040 X cannot be sent electronically and must be mailed.

    •    If you are fixing more than one year of returns, you will need to complete a separate 1040X form for each and submit it in separate envelopes.

    •    You must also include schedules or forms affected by the changes.

Where is the amended return?

    •    You can track your amended return of last year by using the IRS online monitoring tool.

    •    You can also track the progress of the adjusted tax return by calling the IRS at 866-464-2050.

    •    The modified return can take three weeks to appear on the IRS system and up to sixteen weeks to process.

    •    If nothing has happened after sixteen weeks, call the IRS again or ask someone from a local IRS office to investigate your request.

Freddie Cook, CPA
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