Filing an Amended Tax Return

taxesDo you need to file an amended tax return? If you’ve made a mistake in filing your taxes, you probably do. (Unless that mistake is a math error or forgetting to include a W-2 or schedules. According to the Amended Returns tax topic, the IRS will usually fix math errors for you, and will request missing W-2s and schedules from you.)

Why you might amend your return

Typically, you’ll need to file an amended tax return if you’ve made a mistake in reporting income (such as if you forgot to include some income or entered the wrong amount), if you’ve selected the wrong filing status (for example, single when you qualify to file as head of household), or if you received a corrected W-2 or broker statement.

Other reasons could include needing to make changes due to deductions or credits you may have missed or shouldn’t have claimed, if you’ve claimed someone as a dependent when you shouldn’t have, or if you didn’t claim someone who you’re qualified to claim.

Basically, if you’ve discovered something that changes your tax situation (and many things do), you should probably file an amended return. See a tax professional if you have questions about whether or not you need to do so.

How to file an amended tax return

Filing an amended tax return is relatively easy. To do so, you use Form 1040X to amend your return for the year where you made the mistake. If you need to change more than one year, you’ll need to file a separate Form 1040X for each year.

There are detailed Form 1040X Instructions available on how to file the form, but basically Form 1040X has a column where you enter the original figures, a column where you enter the corrected figures, and a column where you enter the difference between the two. You’ll also need to explain what you changed and why you made the change.

Refunds and payments due

If you think you might be getting a refund based on an amended return, remember to file your amended return quickly. That’s because that according to the IRS, “Form 1040X must be filed within 3 years from the date of your original return or within 2 years from the date you paid the tax, whichever is later” in order to claim a refund.

If you think you’ll owe money based on an amended return, you should know that interest on amounts due to the IRS is compounded daily — so the sooner you can pay what you owe (even if you can only pay part of it), the better off you’ll be. See the IRS’ tax topic on Penalties and Interest Charges for more information.

Don’t forget the state

Finally, keep in mind that since many states use your federal return as a basis for filing, if you’re amending your federal tax return, you’ll probably also need to amend your state return. That process is likely similar, but you should contact your state’s department of revenue for details.