Hey guys, it’s Bette Hochberger, CPA, CGMA here! Filing your taxes can be a complicated process, and it’s not uncommon to realize that you’ve made a mistake or discovered new information after you’ve already submitted your return. Fortunately, the IRS allows taxpayers to amend their tax returns. 

Here’s a guide on when and how to amend your tax return.

Errors in Income Reporting

If you receive additional income documentation (such as a W-2 or 1099) after filing your return, you’ll need to amend to report the correct income. This is particularly important because failing to report all your income can result in penalties and interest from the IRS. Correcting income errors ensures that your tax liability is accurate and helps you avoid potential legal issues.

Incorrect Deductions or Credits

Sometimes, you might realize that you missed claiming a deduction or credit, or claimed one incorrectly. Deductions and credits can significantly affect your tax liability, so it’s important to make sure they are reported accurately. Amending your return to include missed deductions or correct errors can lead to a reduced tax bill or even a refund, making it worth the effort to file an amendment!

Changes in Filing Status

Another common reason to amend a tax return is to correct your filing status. You might have filed as single when you should have filed as head of household, or you might have gotten married or divorced and need to update your status. Your filing status affects your tax rate and eligibility for certain credits, so it’s important to have it correctly reported.

Updating Personal Information

If you need to correct personal information like your name, Social Security number, or number of dependents, an amended return is required. Accurate personal information is essential for the IRS to process your return correctly and ensure that you receive any refunds due to you. It also helps prevent issues with future tax filings.

Correcting Tax Forms

Errors on specific tax forms, such as Schedule C for business income or Form 2441 for child and dependent care expenses, might necessitate an amendment. Ensuring that all forms are filled out correctly is crucial for accurately calculating your tax liability and avoiding potential audits.

If you discover a mistake on any of these forms after filing, an amendment will correct the error and update your return.

How to Amend Your Tax Return

To amend your tax return, you need to obtain IRS Form 1040-X, which is used specifically for this purpose. This form can be downloaded from the IRS website. 

When filling out the form, follow the instructions carefully. You’ll need to provide the original and corrected amounts for each item you are changing and explain why you are making these changes. Make sure to attach any necessary forms or schedules that support the changes you are making. 

For example, if you are claiming a new deduction, attach the relevant documentation. You can mail your completed form and supporting documents to the address provided in the instructions, or you may be able to e-file for tax years 2019 and later through some tax software.

How Long Do You Have to Amend Your Tax Return

Generally, you must file Form 1040-X within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later. This timeframe is important to keep in mind to ensure that your amendment is accepted and processed by the IRS. Filing within this window allows you to claim any refunds due to you and correct any mistakes that could impact your tax liability.

Amending your tax return might seem challenging, but it’s a straightforward process that can save you money and prevent future issues with the IRS. Whether you need to correct income reporting, update deductions or credits, change your filing status, or correct personal information, taking the time to file an amended return is worth it. 

Make sure to use the correct form, follow the instructions carefully, and file within the allowed timeframe. By doing so, you can ensure that your tax return accurately reflects your financial situation and take advantage of any potential refunds or reduced liabilities.

Need a redo? Schedule a meeting with us today and we’d be happy to discuss more about amending your tax return.

As always, stay safe, and I look forward to seeing you next time.