You forgot to report some income on your 1040, what should you do? Here are 5 tips for amending returns.
1. Amended returns aren’t mandatory. You might be surprised to find you are not obligated to file an amended return, even though tax advisers may tell you it’s a good idea—that’s because the IRS will probably send you a bill based on the revised Form 1099 or K-1 once IRS computers match that form against your Form 1040.
Amended returns are not mandatory even if something happens after you file that makes it clear your original return contains mistakes. Ask if the return you filed was accurate to your best knowledge when you filed it. If it was, you are probably safe in not filing an amendment, however, if you knew your return was inaccurate when you filed it, you should amend it to make it accurate without delay.
2. You can’t pick what you correct. You don’t have to file an amended return, but if you do, you must correct everything. It is unfortunately not an option to only make corrections that get you money back and not those that increase your tax liability. If you amend, you must correct all errors, not just the ones in your favor.
3. Some errors don’t merit amending. Math errors are not a reason to amend, since the IRS will correct math errors on your return. Likewise, you usually shouldn’t file an amended return if you discover you omitted a Form W-2, forgot to attach schedules, or other glitches of that sort. The IRS can process your return without them or will request them if needed.
Certain parts of your original return can’t be changed by an amended return. For example, you can change your filing status on an amended return from married filing separate to joint, or from qualifying widow(er) to head of household status. However, you cannot change from married filing joint to married filing separate after the due date for the original return (usually April 15) has passed.
4. Timing counts. You must file a Form 1040X, Amended U.S. Individual Income Tax Return, within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later. While this can give you extra time, it is safer to amend within three years of your original return so there’s no dispute.
You can file an amended tax return right on the heels of your original return if you like. However, if you are filing to claim an additional refund, you should wait until after you have received your original refund before filing Form 1040X.
You may cash the first check while waiting for any additional refund.
5. Only paper will do. Amended returns are only filed on paper, so even if you filed your original return electronically, you’ll have to amend on paper. Amended returns are prepared on Form 1040X. Label the top of the 1040X very clearly with the tax year you are amending.
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.