Making an error or omission on your federal taxes can be an impactful oversight. It can increase or decrease your tax liability by hundreds or even thousands of dollars.
Perhaps worse is that it may draw the attention of the IRS and trigger an audit. The good news is that tax filers do have the ability to file an amended return. The amendment process allows you to make corrections to a tax submission.
Tax amendments are certain to be more prevalent in the immediate future. The United States government passed the Tax Cuts and Job Act (TCJA) which dramatically overhauled the nation’s tax code.
Read on to learn how to file an amended tax filing. Explore 10 steps to fix your tax issues and get right with the IRS.
1. Identify the Oversight
Before taking official action, the first step is to identify the mistake. Since each individual and business is different, there are potentially hundreds of mistakes to make.
Some tax filers overlook deductions or credits that materially impact their filing. Others submit accurate taxes, however, receive a new tax document after submission.
The IRS acknowledges the complexity of the tax code. They do not penalize Americans for oversights or errors so long as there is not intent to deceive.
2. Evaluate the TCJA
The TCJA made significant changes to the tax return process. Some filers may not be aware of the many new tax benefits included in this law.
While tax software picks up some of these changes, there is still a chance to overlook important items. Failing to comply with the TCJA will affect paper filers to a larger degree.
There are many new benefits like the qualified business income deduction. At the same time, many prior deductions and tax rules are no longer applicable. Evaluating the new law and how it impacts you is a good reason to seek out the help of a tax professional
3. Check the Date
The window to amend a tax return is not open forever. In general, taxpayers have a 3-year time period to file a tax amendment.
There are rare instances in which the deadline extends beyond 3 years. This happens for tax filers who submit early. If you are an early filer, the IRS starts the 3-year clock on April 15th which gives you more time.
Also, there are special instances in which the IRS will waive the 3-year time limit. This typically occurs when the tax filer can prove a physical or mental condition prevented them from completing an amendment.
4. See If a Superseding Return Is Possible
There is a better option than filing a tax amendment. Depending on the date you filed, it may be possible to submit a superseding return instead.
This is an option for tax filers that submit early. If you haven’t reached the due date, a superseding return is still in play. A superseding return makes the original submission null and void.
5. Collect the Necessary Tax Forms
Your tax return is not the only item that requires amendment. All the supporting tax documents need to be updated as well. You only need to correct the tax documents that are impacted by the omission.
For example, envision a scenario in which you uncover deductible expenses that were unreported. You will need to update Schedule A to reflect these new deductions.
6. Complete a 1040X Form
Now that you have laid the ground work, you are ready to take official action. The next step in the process is completing the 1040X form.
The 1040X is used to correct Forms 1040, 1040A, 1040EZ, 1040NR, and 1040NR-EZ. The primary purpose of this form is to change amounts submitted to or adjusted by the IRS.
Also, the 1040X allows you to change elections after the deadline. In addition, you can use this form to claim a carryback due to a loss or unused credit.
Like your annual tax return, the 1040X form can be submitted in paper or digital form. All major tax software programs facilitate 1040X submission.
7. Determine If Multiple 1040X Forms Are Required
If your oversight crosses over multiple years, multiple 1040X submissions are required. Each 1040X is treated by the IRS as a separate document.
This means that if you are submitting by mail, each form should be mailed separately. If completed online, each 1040X requires a separate digital transmission.
8. Pay Any Additional Tax
In some cases, a 1040X form leads you to owing additional tax. If this hold trues, pay this additional tax as soon as possible.
Failing to do so leaves you vulnerable to interest and penalties levied by the IRS. Interest is typically charged when a tax payment is made after the due date.
There are several penalties the IRS may levy against you. For starters, penalties are in play if you submit a late tax return. The IRS also can penalize you for an erroneous claim of refund or a frivolous return.
9. Cash Your Tax Refund Check
Many taxpayers want to know how to handle a tax return check from their original submission. The answer is to cash it immediately.
In fact, the IRS recommends waiting for the tax refund from the original filing before completing a 1040X. This is the best course of action in the event that you are set to receive an additional refund.
10. Track the Status of Your Amendment
Now that you have submitted your amended filing, the next step is to track its progress. The IRS made it easy to check on your return online.
You can check on the status as soon as 3 weeks after submission. All you need is your social security, date of birth, and zip code. It should be noted that completing processing takes up to 16 weeks.
A Recap of Filing an Amended Return
Mistakes happen and the IRS is happy to work with you on fixing it. Two of the most important steps are submitting your 1040X and paying any outstanding tax or penalty.
If you need help filing an amended return, please contact us to schedule an appointment today.
