Amending an Erroneous Tax Return
Given the complexity of today’s tax laws and the average taxpayer’s tendency to put off filing until the last minute, it should come as no surprise that more than a few tax returns are sent to the Internal Revenue Service (IRS) with incorrect or missing information. Fortunately, it’s easy to make changes to your return by filing Form 1040X, Amended US Individual Tax Return.
Amending Your Return
There are a number of reasons
you might need to correct your income tax return. Perhaps you claimed deductions
or credits you should not have claimed or, conversely, you did not claim
deductions or credits to which you were entitled. Overstating or understating
your income is another error that might necessitate filing an amended return. A
taxpayer who discovers, after filing, that he or she should have claimed a
different filing status can set the record straight by submitting Form 1040X.
Oversights on your part are not the only reason tax returns are amended.
Sometimes Congress makes changes to the tax law, and the IRS permits you to
benefit from a retroactive change by amending your original return.
According to the IRS, if you
should discover after filing that you made an error in arithmetic, there is no
need to file an amended return. The IRS computer will detect the error, notify
you, and adjust your return automatically.
Completing Form 1040X
Form 1040X is a single sheet
that you must complete front and back. On the front side of Form 1040X, you can
record changes in your income, credits, or deductions and calculate any net
increases or decreases in your taxes. On the reverse side of the form, there is
space for you to provide a complete explanation of the changes you are making
and the reason for each. Be sure to write clearly and concisely. If you need
more room, you may attach additional sheets of paper. It is important to show
the year of your original return and, if the original return was filed jointly,
both spouses must sign the amended return.
Along with Form 1040X, you
must submit any forms or schedules that are applicable to the changes you are
making. For example, if you are correcting the amount of wages you received or
the tax withheld, you will need to attach a copy of your corrected W2 Form. If
you failed to file for the Child Care Credit, you will need to complete and
submit Form 2441, Child and Dependent Care Expenses, in order to qualify.
Settling Your Tax Bill
When you file an amended
return, you can have all or part of any tax overpayment refunded to you, or you
can ask to have it applied to next year’s return. If you choose to get a
refund, it will be sent separately from any refund due on your original return.
Taxpayers who owe tax must pay the full amount with Form 1040X, even if the
original return showed an overpayment. The IRS will not reduce your refund check
to cover the additional tax due on your amended return. You must pay the amount
due and you will receive the original refund check separately. Send your return
to the IRS Service Center for the area where you live (see Form 1040
Instructions for addresses of service centers). If you are amending returns for
more than one year, you should send each one in a separate envelope to the
proper IRS Service Center.
The statute of limitations —
that period during which the IRS allows you to make corrections and changes —
is generally three years after the original timely return was filed or two years
from the date the tax was paid, whichever is later. If you do not file your
claim within this period, you may not be entitled to a credit or refund.
Since the IRS routinely shares information with states that have income taxes, it’s recommended that you make any necessary amendments to your state and local returns as well. A tax professional can advise you on the correct procedure for amending state, local, and federal returns.