Tracking amended tax return

What you should know about filing an amended tax return

Tracking amended tax return

Even taxpayers who filed by April 15 may not be done wrangling with Uncle Sam any time soon.

The reason: They're amending their return. In most cases, the IRS gives taxpayers three years from the date they filed their original return, including extensions, to make changes. Regardless of what form you initially filed, and how, federal income tax amendments must be submitted via paper using form 1040X. Each state has its own forms and procedures.

"It's not extremely common, but it's certainly not rare, either," said Melissa Labant, director of tax advocacy for the American Institute of Certified Public Accountants. Last April, the IRS said it expected that almost 5 million taxpayers—about 4 percent of the 131.2 million returns received—would file an amended return.

Although the IRS has not yet released estimates for this year, spokesman Eric Smith said it's likely to be a figure similar to last year's. "It's not unusual for there to be 3 to 4 percent of returns, sometimes a little more, amended in a given year," he said. By April 17, according to its latest report, the agency had received nearly 132.3 million individual returns, 0.8 percent more than last year.

"We have an amended return for the same reason pencils have erasers," said Smith. "We all make mistakes. … It's a mechanism to fix what's wrong."

Reasons why a taxpayer might amend an income tax return filed this year, or even in previous years, vary widely. Sometimes it's as simple as a 1099, K-1 or other tax form that arrives or is corrected after you've already filed, said Barbara Weltman, a tax and business attorney based in Vero Beach, Florida. Or maybe you realize you forgot to claim a valuable deduction. Worthless securities and bad debts also merit an amendment, she said—in which case, taxpayers have up to seven years to go back and claim the loss.

Other circumstances are tied to specific events and rule changes. For example, after the Treasury Department and the IRS ruled in 2013 that married same-sex couples would be treated as married for federal tax purposes, those couples could opt to amend returns filed up to three previous years. Victims of some natural disasters may also be able to amend their prior year's return to include the losses, said Smith, which can result in a faster refund than waiting until the next filing season.

"It's a relatively simple process to file an amended return if you have the corrected information," said Labant. The three-column Form 1040X has taxpayers copy line items from their original return, noting which should be corrected and the net change. There's a section to explain why you're amending the return. Taxpayers should also attach any documents supporting the change (i.e., that missing charitable donation receipt or corrected 1099).

There's good reason to file an amendment quickly if you suspect you owe the IRS more. "It stops the clock on penalties," said Weltman. "It behooves you to not wait until the IRS catches you." (Keep in mind, in most cases the IRS can audit returns filed within the last three years, or up to six if a taxpayer fails to report 25 percent of more of his income.) But if you made a simple math error, there's usually no need to amend the return, she said—the IRS's computers usually catch that quickly and generate a notice with your corrected bill.

Of course, a refund is also good reason to file an amended return. In that case, weigh your time and money costs in refiling against the potential gain, said Labant. "It may not be worth your while," she said. "Why spend a buck to get back a quarter? That's going to vary on a case-by-case basis."

If the government owes you, don't expect to get that money any time soon. While the IRS has said it issues most tax season refunds within 21 days of receipt, that's for original returns only. "You should generally allow 8 to 12 weeks for Form 1040X to be processed," it notes in the instructions. "However, in some cases, processing could take up to 16 weeks."

"We very much have a priority during the tax season for current year, original returns," Smith said. "Amended returns are a somewhat lower priority." Paper returns also contribute to the lag, he said, because they must be reviewed by a person rather than a computer.

Tracking amended tax return

You may discover you made a mistake on your tax return. Sometimes it’s not a big deal. Other times it can cost you money. You may even make money (if you can call it that) by filing an amended return if you are entitled to a refund. Other times you are absolutely required to amend.

If you’re one of those people who isn’t always perfect, here are 10 tips on amending your return:

Tip #1: When You Should Amend Your Tax Return

You should amend your tax return if you need to correct your filing status, the number of dependents claimed or your total income. You should also amend your return to claim tax deductions or tax credits that you did not claim when you filed your original return. By amending the return to include these tax deductions or tax credits your tax burden will almost certainly be reduced. These are just a few reasons to amend your return. The instructions for Form 1040X, Amended U.S. Individual Income Tax Return, list more reasons to amend a return.

Tip #2: When You SHOULD NOT Amend Your Tax Return

In some cases, there’s no need for you to amend your tax return, even if you think you do. Here’s an easy example – the IRS will make corrections, such as math errors, for you. Forget to include a required schedule with your return? Don’t worry about it – the IRS will mail you a notice about the missing item.

In some cases, there’s no need for you to amend your tax return, even if you think you do. Here’s an easy example – the IRS will make corrections, such as math errors, for you. Forget to include a required schedule with your return? Don’t worry about it – the IRS will mail you a notice about the missing item.

Use Form 1040X to amend your return. You can get Form 1040X on at any time. Make note however that you must file it by paper; you cannot file it electronically. Make sure you check the box at the top that shows which year you are amending. Review Form 1040X’s three columns. Column A shows numbers from the original return. Column B shows the net increase or decrease for the numbers you are changing. Column C shows the corrected amounts. Explain what you are changing and the reasons why on the back of the form. You don’t want to leave anything to chance.

Tip #4: More Than One Tax Year

If you need to file an amended return for more than one year, you must use a separate 1040X for each tax year. Mail them in separate envelopes to the IRS. Send each year to the specific address identified within the instructions for Form 1040X.

Tip #5: Other Forms Or Schedules

If your changes have to do with other tax forms or schedules, make sure you attach them to Form 1040X when you file. It will definitely cause a delay if you don’t.

Tip #6: Amending To Claim An Additional Refund

Everyone loves an additional refund! I’m sure you’re anxiously waiting to get the amended form out if you are entitled to receive more money back from the IRS. Unfortunately, if you are waiting for a refund from your original tax return, don’t file your amended return until after you receive the refund. All amended returns take up to 16 weeks to process. You’ll have to wait a bit to receive any additional refund you are owed.

Tip # 7: Amending To Pay Additional Tax

This one is the worst. You have to file an amended return because you owe more tax than you originally indicated. In that case, you should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.

Tip #8: When To Reconcile the Premium Tax Credit

You may also want to file an amended return if:

  • You incorrectly claimed a premium tax credit, or

  • If you received a corrected or voided Form 1095-A (Health Insurance Marketplace Statement).
  • Tip #9: When To File For Your Refund

    When to file – Everyone wants a refund. Make sure you don’t miss out on yours! You have a limited time to amend your return in order to do so. You can claim a refund by filing Form 1040X within three years from the date you filed your original tax return. You can also file it within two years from the date you paid the tax, if that date is later than the three-year rule.

    Tip #10: How To Track Your Return

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