Since preparing your tax return hasn't been intimidating enough, there may be times when you need to amend a pre-filled tax return. While filling out a correct return may seem complicated initially, it is a fairly straightforward process. This is especially true if the tax return was prepared using tax preparation software or employing a tax professional's services. Read on to learn how to amend your taxes and how to verify an amended tax return.
Why you may be required to amend your taxes
There are several reasons why you may need to amend your taxes. The most common reasons are:
There was a deduction you could have made, but you didn't know you could.
You realize after the fact that you have claimed a deduction to which you are not entitled.
You received income from an unusual source, such as 1099, from someone you did a contract job for.
You will receive an income tax return after completing your income tax return. It could be a W-2 for a job you did for a short time at the start of the year or 1099 that earns interest or dividends on an account you forgot.
Your statement was accidentally recorded with the wrong filing status.
These are a few of the reasons for submitting an amended return. Receipt of almost all tax documents after completing the original return may require submitting a correct return.
Things to consider before submitting an amended return
Before submitting an amended return, you will need to ensure that the IRS has taken the time to process the original return. If you submit the original return and then submit an amended return two weeks later, the IRS may process the amended return before the original one. This might raise several uncomfortable issues and several complications.
You must wait for a minimum of two to three months after completing the initial declaration before submitting an amended return. Also, note that due to the restrictions caused by COVID-19, it is taking the IRS some time to process these things.
If you believe that an amended return will result in a refund, you must submit the amend:
Within three years after the deadline for submission of the original return, or
Within two years of payment of the tax due in that year, whichever is later.
Unfortunately, you will not be able to request a refund if any of the conditions have expired.
How to amend your taxes
Amending your tax return is a fairly straightforward process, although it doesn't look like it if you've not done it before. In most cases, you will amend your return due to a single line error.
It could be income that was not previously reported on the return or a deduction that you omitted. In this case, this will be the only correction you will need to make to properly amend your return.
You will start by completing IRS Form 1040-X, Amended Personal Tax Return.
Submit the claim using the tax preparation software for the original application that needs to be amended. The whole process will not be more complicated than entering the information in a few software boxes.
To understand exactly how the modified tax process works, let's take a look at each section of 1040-X:
Personal Information Section
If this section sounds familiar to you, it is almost identical to a standard Form 1040. It will include all of the general information provided in the original return. The main difference is in the title, which refers to a 1040-X for the amended return.
However, please note that the first line indicates the calendar year for submitting an amended return. The bottom of this section will also give you the option to amend your filing status whether you are single, married filing separately, married filing jointly, head of household, or qualified widow(er).
The main section of the 1040-X Form
This section is indeed the basis of an amended income tax return. It also looks a lot like a standard Form 1040, based on the descriptions to the left.
The main difference is in the three columns on the right: A, B, and C.
Column A will include your tax return numbers, as originally reported.
Column B shows any amendment in the dollar amount originally shown on your return.
Column C shows the combined values: the numbers from Columns A and B are added together to give the correct final totals.
The bottom of this section looks a lot like its counterpart on Form 1040. It will provide the totals for lines 1 through 15 and calculate any refunds or amounts due to the information amended.
Part 1 - Exemptions and Dependents
This section appears after the first page of Form 1040-X and is not as relevant as before. Before the 2017 TCJA, taxpayers could apply for personal exemptions. These exemptions could have been taken for the taxpayer, the taxpayer's spouse, and any eligible dependent.
TCJA has eliminated personal exemptions, so this section will mainly apply to returns submitted before 2018.
However, you may need to amend the information received for other reasons, such as claiming certain tax credits. An example is the Child Tax Credit (CTC), which requires a dependent child to be under 17 at the end of the tax year.
Explanation for Amending
Whether you are submitting the amended return manually or using tax preparation software, you will need to complete this section. You will explain in detail why you are amending the return. This will likely give the IRS a written explanation to keep track of the new numbers you send.
Finally, you will need to complete the signature box at the bottom of the form. It looks exactly like the signature box at the bottom of Form 1040 and is self-explanatory.
Attach the relevant supporting documents to the amended return
If the reason you are filing an amended tax return is that you have received additional tax information, you must include a copy of each document with the return.
This can include a W-2, 1099, or proof of a previously deducted tax deduction or business expense. It may also be necessary to provide a fully completed (and amended) Schedule A if you have amended your itemized deductions.
Where to file the amended tax return
If you file the amended tax return using the tax preparation software, you will be given a specific address to file the return. But if you prepare the return slip manually, you must send it to the address given in the instructions.
Please note that the address you will need to send your amended tax return to is probably not the same address you used for your initial tax return. Indeed, the IRS has specific processing centers for certain tax forms.
If you electronically file the amended tax return, you can make all payments due using the tax preparation software you use. If you file manually, you will need to include a check or send payment electronically via IRS Direct Payment.
Bottom line
If you receive any information after completing the original return or if you find an error in the original return, it is best to send an amended return as soon as possible.
In most cases, the IRS will eventually notice the discrepancy and contact you to resolve it. But it can take several months or even years. And over time, penalties and interest rates go up. If there is a large tax deficit, the fine and interest can run into the hundreds or even thousands of dollars in some cases.
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