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Guide to Filing an Amending Federal Tax Returns

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Guide to Filing an Amending Federal Tax Returns

Despite your best efforts to diligently prepare your tax return, at some point, you will undoubtedly need to amend your tax return. It may happen after you have filed your tax return and realize you need to make changes, or you receive a document after you have already filed your return. Every taxpayer needs to understand how and when to file an amended tax return. The following information should be used to determine when you need to file an amended return and the proper procedure for filing an error-free amended return.

Reasons Why You May Need to Amend a Tax Return

Just because you found an error does not mean you need to file an amended return. If the mistake is mathematical, you probably do not need to file an amended return; the IRS computers will spot your error and make the corrections automatically. It would help if you focused on the following reason for amending a return:

  • You received additional withholdings listed on a 1099 or W2
  • You discovered additional income on 1099, W2, or other statements reporting income
  • You need to add or remove dependents
  • You need to add, eliminate, or recalculate credits
  • You need to correct your filing status
  • You need to update the standard, itemized, or above-the-line deductions

To avoid problems with the IRS, it is important to file an amended return as soon as you discover the mistake in your filing status, income, credits, or deductions. Remember, you can only receive a refund within three years of filing the original return.

How to File an Amended Tax Return

If filing an amended return is beneficial or desirable, you must file manually using Form 1040X. Form 1040X can be used to correct the following previously filed Forms; 1040, 1040A, 1040EZ, 1040NR, and 1040NR-EZ. You must reference the original return when completing Form 1040X. Column A (original amount) will list the original amounts from the originally filed return. Column C (correct amount) will list the new corrected amount. Column B (net change) is the positive or negative difference between columns A and C. In the narrative to Form 1040X, your will want to explain the changes, line by line (i.e., Line 1 decreased because……, Line 2 increased because…). It is important to be very precise with the amended return and provide excellent line-by-line explanations. Remember, an agent handles every amended return, and if they find too many errors or issues with the amended return, they may refer the return for an audit. In addition to a detailed narrative, include any additional documentation that supports your case (W2, 1099, etc.). Remember, you want to provide all the information for the agent to approve the change quickly and easily to your original return.  It is important to include a copy of the full originally filed return and a copy of the full corrected return.  The order should be as follows;

  1. Form 1040X, including the narrative
  2. Colored separator page
  3. A full copy of the original return
  4. Colored separator page
  5. A full copy of the corrected return

 

The agent must verify the amounts listed on the original return. If you do not provide a copy, they must order a copy. By providing a copy of the original return, they can verify the amount on their screen without requesting a copy of the original return.  This can significantly cut down on the processing time.

When you file an amended return, it may change the amount of refund received or tax liability owed. It may be in your best interest to consult with a tax professional for advice on managing the changes as a result of your amended return and how it may affect a subsequent return. It may require you to amend the subsequent return as well.

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