It's often said that everyone makes mistakes. And sometimes, when taxes are involved, some of those mistakes turn up on annual tax returns. Maybe you discover an error right after you filed your tax return, or perhaps months (or even years) pass before you realize that a new development changed the amount of tax that you should have paid on a prior return. Thankfully, whether the mistake is in your favor or, on the not-as-bright side, in the government's favor, filing an amended tax return can be the next best step.
Filing an amended return isn't particularly difficult, but there are a few things you should know about the process before getting started. It also helps to be familiar with some common occurrences that can trigger the need for an amended return. So, here are 11 tips on how and when to file an amended tax return.
File a Superseding Return if the Filing Deadline Hasn't Passed
What if you filed your tax return but discover a mistake the very next day? If the filing deadline, including extensions, hasn't passed, then you don't want to file an amended tax return. Instead, you can file a "superseding return." Basically, if you file a second return before the filing deadline, the second return "supersedes" the first return and is treated as the original return.
Say, for example, you filed a 2021 return in February 2022 and, instead of getting a refund, elected to apply your overpayment against your 2022 tax liability. But then you lost your job in March and wanted to get your refund this year. If you filed a superseding return before the April 18 due date for 2022 returns, you'll receive the refund in 2022. It might take a while before the IRS is able to process your superseding return, since they're behind on tackling paper returns. But this is an example of how, depending upon when you file your superseding return, you may not necessarily have to wait until the next year to benefit from the overpayment.
Take Note: Previously, you could only file a superseding return on a paper Form 1040. But the IRS recently changed that. As of June 2022, a new electronic checkbox has been added to certain tax forms to show that a superseding return is being filed electronically.
Let the IRS Correct Certain Errors
You don't need to file an amended return if you discover a simple math or clerical error on your return. The IRS can correct those types of mistakes on its own. Also, if you forgot to attach a particular form or schedule to your tax return, you don't need to file an amended return to address that. The IRS will contact you by mail if they need additional information to fix those kinds of errors. However, you should file an amended tax return if there's an issue that changes your filing status, income, deductions, or credits.
Use Form 1040-X
If you do need to file an amended personal income tax return, you'll probably need to submit IRS Form 1040-X, which is used to:
- Correct Forms 1040, 1040-SR, or 1040-NR;
- Make certain elections after the election deadline;
- Change amounts previously adjusted by the IRS (except IRS changes to interest or penalties); or
- Claim a loss or unused credit carryback.
In 2020, the IRS began allowing taxpayers to file an electronic Form 1040-X with commercial tax-filing software to amend 2019 Form 1040 or Form 1040-SR tax returns. Since then, the IRS has added more options that you can use to electronically correct or amend returns. For example, you can now e-file amended Forms 1040, 1040-SR and 1040-NR for any tax year after 2018. You can also amend your return electronically if your filing status changed or you need to add a dependent. In addition, residents of Puerto Rico and other U.S. territories can make corrections to a 2021 1040-PR or Form 1040-SS electronically.
Filing Tip: You can still use the paper version of the Form 1040-X if you want. If you choose that option, be sure to follow the instructions for submitting the paper form.
You can use Form 1045 instead of Form 1040-X in limited situations. For example, Form 1045 might be an option if you had to repay income that was previously taxed or you're carrying back certain losses or tax credits. You should also use Form 843 if you're requesting a refund of penalties and interest or an addition to tax that you already paid. Otherwise, generally stick with Form 1040-X.
Also make sure that you file a separate Form 1040-X for each tax year. Submit them separately, too. If filing a paper return, check the box at the top of the form to indicate the tax year for the return being amended. If there isn't a box for that year, write in the year in the space provided.
Don't forget to sign the amended return. Attach any required forms or schedules as well. Generally, you need to attach any schedule or form relating to the changes you're making. For example, attach Schedule A if you're changing an itemized deduction. The form instructions tell you which other attachments are necessary.
File Your Amended Return Before It's Too Late
Generally, you must file an amended tax return within three years from the date you filed your original return or within two years from the date you paid any tax due, whichever is later. If you filed your original return before the due date (usually April 15), it's considered filed on the due date. There are a number of special due-date rules for amended returns that are based on changes related to bad debts, foreign tax credits, net operating losses, natural disasters, service or injury in a combat zone, and a few other situations—check the instructions for Form 1040-X for details.
Don't file your amended tax return too quickly, though. If you're due a refund on your original return, wait until you actually receive the refund before filing an amended return for that tax year.
Pay Any Tax Owed Right Away
It's nice if amending your return results in a refund, but, unfortunately, that's not always the case. If you owe the government money as a result of filing an amended return, pay the tax right away to avoid additional IRS interest and penalties.
You can pretty much count on paying some interest, since the IRS charges interest on any taxes not paid by the due date. But you can minimize the amount of interest you'll be charged by paying the tax owed quickly. The interest rate changes on a quarterly basis (it's 5% for the third quarter of 2022 and 6% for the fourth quarter).
You'll also pay a penalty if you don't pay any tax due within 21 calendar days of the date of the IRS's request for payment (10 business days if the amount of tax is $100,000 or more). The penalty is usually equal to 0.5% of the unpaid amount for each month or part of a month that the tax isn't paid. However, the IRS might waive the penalty if you have a (very) good reason for not paying your tax on time.
There are several ways to pay any tax due. You can pay online or by phone, mobile device, cash, check, or money order (see the instructions for Form 1040-X for details). If you can't pay the full amount right away, the IRS recommends asking for an installment agreement that will allow you to make monthly payments. You'll still pay interest and penalties, and probably a fee to set up the agreement. Other, potentially less costly alternatives include bank loans or credit card payments.
You Can Track the Status of Your Amended Tax Return
You can track the status of your amended tax return online using the IRS's "Where's My Amended Return?" tool or by calling 866-464-2050. You can get the status of your amended returns for the current tax year and up to three prior years. The automated system will tell you if your return has been received, adjusted, or completed. To access the system, all you need is your Social Security number, date of birth, and zip code.
It can take up to three weeks after you mail your amended return for it to show up in the IRS's system. After that, processing can take sixteen weeks or longer—so you have to be patient (and don't file a second amended return if the process takes longer).
COVID Delays: Due to COVID-related issues, the IRS is behind on processing amended tax returns. As of August 20, 2022, the tax agency had 1.9 million 1040-X forms waiting to be processed. As a result, it can take more than twenty weeks for the IRS to handle an amended return currently in its system.
Claim Missed Deductions or Credits
Now let's get into some of the more common reasons why you might want to file an amended tax return. Many people file an amended tax return to claim an overlooked tax deduction or credit. The tax code is full of tax breaks, so it's easy to miss one that applies to you. If you discover a tax deduction or tax credit that you qualify for after filing your original return, simply file an amended return within the three-year period described above to claim that deduction or credit now and get a refund. Filing an amended return might not be worth the effort if doing so is only going to reduce your taxes for that year by a few dollars, but you do have the option.
Watch for New Laws Applied Retroactively
If there are any retroactive tax laws enacted that include new or expanded tax breaks, you'll want to check your previous tax returns to see if you can take advantage of the new law or laws. If a new or expanded tax break that benefits you materializes later in the year, submit your Form 1040-X as soon as possible to get a refund for some of the taxes you already paid.
Stay Tuned: Congress triggers a lot of amended returns when it passes a "tax extenders" bill. The term "tax extenders" refers to a collection of tax breaks that keep expiring but are then retroactively extended by Congress for another year or two. This cycle has repeated itself over and over again for years. The Inflation Reduction Act of 2022 extended a couple of tax credits for individuals that expired in 2021, but that shouldn't generate the need to file an amended tax return because the law didn't change anything for tax years before 2022.
Otherwise, as of press time, other tax breaks for ordinary Americans that expired at the end of 2021 have not yet been extended for the 2022 tax year or beyond (e.g., the mortgage insurance premiums deduction). However, if a tax extenders bill is enacted after you file your 2022 tax return, make sure you file an amended return if you qualify for any of the extended tax breaks.
You Receive New Information After Filing Your Return
You'll need to file an amended tax return if you receive information after filing your original return that significantly changes your taxable income. For example, you might receive an amended W-2 form or a 1099 form showing previously unreported income (enough to make a difference on your return). If the new information affects the deductions or credits that you claimed on your original return—for example, by upping your income to a point where the tax break is reduced or no longer available to you—you'll need to file an amended return for that too.
You won't receive a refund for those types of changes, but you still need to file an amended tax return to avoid penalties and additional interest.
Changes you make on an amended tax return that affect your income, tax deductions, or tax liability may also affect the amount of (or cause you to owe) the alternative minimum tax. So be sure to check that as well.
Disaster Victims Can Amend Return to Deduct Losses
If you're the victim of a hurricane, wildfire or other natural disaster, you might be able to file an amended tax return to claim a casualty loss deduction for the tax year before the disaster. Alternatively, you can claim the loss in the year of the disaster. You should select whichever tax year is more favorable to you. However, the loss must be attributable to a federally declared disaster that occurred in an area warranting public and/or individual assistance. Otherwise, this special rule doesn't apply.
If you decide to claim the loss for the year before the disaster, you must file your amended tax return no later than six months after the due date for filing your original return (without extensions) for the year in which the loss took place. So, for example, if the disaster occurred in 2021, and you want to claim your loss on your 2020 return, you should have filed an amended 2020 return by October 15, 2022.
Also note that a personal casualty and theft loss deduction is generally subject to a $100-per-casualty limit. It also can't exceed 10% of your adjusted gross income, and you have to itemize to claim it. (Note that, if you don't itemize, you can claim an additional standard deduction for uninsured casualty losses in excess of a $500 threshold from a federally declared disaster declared in 2018, 2019, and 2020.
Take Advantage of State Tax Laws
If you prepare your own tax returns, it's best to fill out both your federal and state returns before actually submitting either one. But sometimes that's just not possible. You might be too busy to do them both at once, so you send in your federal return (which has to be done first) one day, and put off your state return for another day. Then, when you're finally working on your state return, you realize that something you did on your federal return is going to cost you more in state taxes than what it saves you in federal taxes. If that's the case, it might make sense to amend your federal tax return—and pay a little more in federal taxes—so you can cash in on a larger state tax break.
Here's an example: For the 2021 tax year, Andrew and Becky filed a joint federal return reporting $150,000 in federal adjusted gross income. They had $23,000 of itemized deductions, but they claimed the $25,100 federal standard deduction because it's higher. Their overall federal tax liability was $18,975. A week after filing their federal return, Andrew and Becky started working on their state return. They soon realized that (1) their state standard deduction is much lower than the federal standard deduction, and (2) they cannot itemize on their state return unless they itemized on their federal return (which is a common restriction). Claiming their state standard deduction, which was only $4,000, resulted in an overall state tax liability of $7,000.
If Andrew and Becky file an amended federal return and claim their $23,000 in itemized deductions instead of the $25,100 standard deduction, their overall federal tax liability will increase by $462. However, that allows them to itemize on their state tax return, which will lower their overall state tax liability by $750. That's an overall gain of $288!
And while we're talking about state tax returns, remember that a change made to your federal return may very well affect your state tax liability, too. So, if you've already filed your state return, check to see whether filing an amended federal return means you'll have to file an amended state return as well.
Rocky Mengle was a Senior Tax Editor for Kiplinger from October 2018 to January 2023 with more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, Rocky worked for Wolters Kluwer Tax & Accounting, and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky holds a law degree from the University of Connecticut and a B.A. in History from Salisbury University.
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