When you made a mistake on your tax return, you should file an amended tax return to make that correction. However, please keep in mind that you can only amend returns that you processed for the past three tax years so you need to be aware of the time limitations.
- For example, if you file your tax return in April 15, 2010 for the 2009 tax year, you have until April 15, 2013 to amend it. So, if you expect to receive additional refund and you missed the deadline, you can no longer avail that refund.
That is why it is critical to review or have a tax professional review your previous returns for the past three years as you never know what you have missed. Most tax professional will review your return for free and they will only charge you if you let them prepare and file the amended tax return. Of course, you can prepare and file the amended return yourself if you know how to do it.
When filing an amended return and you are filing to claim an additional refund, you need to wait until you received your original refund before amending your return.
- For example, you filed and submitted your 2010 tax return on February 20, 2011 but after reviewing it further, you noticed that you missed the “additional child tax credit,” you may need to wait until you receive and cash that refund check before you can file an amended return to add the “additional child tax credit” and receive additional refund.
On the other hand, if you owe additional tax for prior tax years, you need to file an amended tax return and pay the tax as soon as possible to limit interest and penalty charges as Interest is charged on any tax not paid by the due date of the original return.
You Need to File an Amended Tax Return for the Following Reasons:
- Changing your filing status – if you and your spouse initially filed as married separate, you can amend your return to file married joint. However, you cannot amend it to “married filing separate” if you and your spouse filed jointly. Other reasons could be incorrectly filing as single instead of head of household or incorrectly using head of household instead of qualifying widower with dependents. This makes a difference on the amount of the standard deduction and tax rate.
- Adding More Dependents – perhaps you forgot to include a dependent and you want to add one on your return. For example, you have a newborn baby for that year and he/she did not have a social security number yet. Or you may need to exclude a dependent because someone else’s claim it. Although in this case, you may get notification from the IRS that someone has claimed your dependent and you are not eligible for that.
- Forgot to Claim Deductions or Credits – One of the most common errors that people make is overlooking tax deductions and tax credits. If you already filed your return and you discover that you have additional deductions to claim, you can file an amended tax return. In some cases, the IRS will notify you if you qualify on certain credits such as an Earned Income Credit. However, if you did not receive that notification, you may need to file an amendment.
- Claiming Incorrect Deductions and Credits – On the other hand, you may claim deductions or credits where you may not be entitled to. In addition, you may claim a position that is incorrect or different from the IRS views. In most cases, the IRS would actually catch it and notify you for those errors or they may conduct an audit as well. If there are errors and you have received refunds in which you’re not entitled to, you may need to pay the penalties and interest for it.
- Failing to Report Additional Income – perhaps you have a side business and you did not report your income on that. You may have a hobby or have sold a property where you have a big gain and did not report that. Then this is the time to amend your return and pay additional taxes before the IRS penalizes you for any underpayment. If the amount is material, the IRS may charge additional penalties such as negligence or in some cases civil or criminal fraud.
You Do Not Need to File an Amended Tax Return for the Following Reasons:
- For math errors – if you make math or calculation errors, you do not need to amend the return as the IRS will normally do the correction for you.
- Forgot Form or Schedules – If you’re missing documents such as a W-2s or other schedules, you generally do not need to amend your return because the IRS Â will notify you asking for those documents anyways.
How to File An Amended Tax Return
- You need to complete Form 1040X to amend your past returns
- Ensure that you include the tax year that you are amending at the top of Form 1040X
- You must complete one form for each tax year that you are amending (generally the past three years). You cannot combined multiple tax years in one form.
- You need to include an explanation on why you are amending your tax return on section III of the form.
- For additional information, please read the Instructions for Amending Your Return on how to complete the amended tax return form.