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Should I Amend My Tax Return?

Some taxpayers may not be aware that they can amend a tax return.

You filed your tax return on time and got your tiny refund in the bank. Hooray! Then, a new tax form appears in your mailbox – one that might change how many deductions you should have reported. Oh, no! What do you do? It’s possible that you may need to file an amended tax return. But, don’t panic. Some errors on your tax return don’t merit an amendment. Read on to find out when and how to file an amended return, and what to be cautious about.

When should I file an amended tax return?

First of all, understand that amended tax returns are NOT mandatory. If you filed your original return on time and it was accurate to the best of your knowledge, you may not have to file an amendment. According to the IRS, you should file an amended federal tax return if you discover that your filing status, income, deductions, or credits changed for the tax year you reported. That means if you get a tax form that shows significant additional income or credits after you filed, then you should file an amendment. Be aware, though, that amended returns are more likely to get audited, so be sure your errors are worth correcting.

When should I NOT file an amended return?

Do not file an amended return to correct mathematical errors, clerical errors, or if you forgot to attach a schedule or form, such as your W-2. The IRS will correct the math errors, and if they want to see the missing schedules and forms, they will request them from you by mail. Be aware of IRS phone scams. The IRS will not contact you by phone or email.

How do I file an amended return?

If you do file an amended return, use tax form 1040X (Amended U.S. Individual Income Tax Return), whether you filed a 1040, 1040A, or 1040EZ to begin with. If you also have “Specified Foreign Financial Assets” you will also need to file for 8938. To complete the form, you will need to fill out three columns – the original amounts from your filed return, the new amounts, and the differences. You must correct the whole tax return, not just the parts that can get you more money. You must include a copy of your original return and forms (W-2’s, etc.) with the amended return. Amended tax returns cannot be filed electronically. They must be snail mailed to the IRS.

What if I owe more tax on my amended return?

If you owe more tax, you will need to send a check, pay by debit or credit, or pay online at the IRS website. If you amend the return prior to the return’s tax year filing deadline, you will avoid additional penalties or interest. If you file your amended return after the filing deadline of the year you are amending, then you may owe penalties and interest. The IRS will calculate these and send you a bill, which you can pay or contest.

What if I’m owed a refund on the amended return?

To get a refund, you must file an amended return within three years of the date you filed the original return or two years from the date you paid the original tax, whichever is later (this timeline applies to all amended returns). If that amount is significant, the IRS is more likely to look even closer at your return. Instead of getting your refund in a check, you can have it applied to your current year’s estimated taxes.

Timing of amended return filing

If you do need to file an amended tax return, be aware that the statute of limitations for the IRS to audit any (non-fraudulent) return is still 3 years from the date of the original filing, not from the date of the amended filing. If you file the amended return within 60 days before the three-year statute ends, the IRS must assess your amended return within 60 days. So, timing of your amended return could be important to you. Be sure to ask your accountant about the timing of filing your amended return.

What happens after I amend my return?

Amended returns can take up to 12 weeks to be processed, so don’t expect a check to come quickly. Three weeks after you file, you can check the status of your return by calling the IRS at 1-866-464-2050 or by logging into the IRS website and selecting the online tool called “Where’s my amended return?” (WMAR).

Filing an amended federal tax return may affect your state tax returns. You should file amended state returns as soon as possible after filing your federal amended return. To do so, contact your state tax agency or your trusted accountant. (Hey! That’s us!!)

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