After filing, you are reviewing your tax return one last time. Suddenly, you realize that you’ve made a mistake! What should you do? The IRS has a simple solution, called the Amended Return.
The 1040x form is filed with the IRS to amend all varieties of individual tax returns, including the 1040, 1040EZ, and 1040NR. The form is a similar but condensed version of the original 1040 form that individuals fill out for their tax returns, except that now there are three columns. The first is for the information that you actually filled out on your individual tax return (you did keep a copy, right?). The second is for the change, whether up or down. The third is for the new, correct amount. The form instructions will walk you through how to fill it out.
At the bottom of the second page, there is room for explanations of the reasons for the changes. It is required to attach supporting forms and schedules only that support the changed return. Some tax preparers also recommend attaching documentation of a large change in your favor, such as a large charitible donation. They say that this will reduce your audit risk because such changes could flag you for a human to review your return. When the human reviews your forms, he or she will see that everything is already in order.
When the amended return is filed may make a difference in your tax liability. If you are filing an amended return after April 15th for the previous year and you owe additional taxes, there will be penalties for late payment, unless you had already filed for an extension. This makes it wise to file your taxes early and not wait until the last minute to do so.
In general, amended returns may be filed up to three years following the deadline of the original return, although in certain limited circumstances, they can be filed up to seven years later. This is especially good news if you discover that you are due a refund!
Not all mistakes require an amended return. The IRS website states, “The service center may correct errors in math on a return and may accept returns with certain forms or schedules left out. In these instances, do not amend your return!” Of course, if your refund or tax should be different because of these missing items but the IRS doesn’t change these amounts, it would be worthwhile to file an amended return.
The process to amend your return is fairly straightforward. However, when you discover a mistake, it is in your best interests to file the amendment as soon as possible!