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Tax Do-Overs: Filing an Amended Return

Tax Do-Overs: Filing an Amended Return - TaxACT

It happens. Just when you think tax season is over and you can forget it, you discover a mistake or omission on your income tax return.

You probably need to fix it by filing an amended return with the IRS.

When to file an amended return

You should file an amended return whenever you discover an error on your return that changes your tax liability for more than a minor amount, or that may cause a problem further down the road.

For example, you should file an amended return if you discover:

  • A substantial noncash contribution
  • Additional business deductions
  • Income, such as unemployment benefits, that you didn’t know you should report
  • A corrected form from your employer, financial institution, or a partnership
  • An incorrect social security number for yourself, your spouse, or a dependent

When not to bother amending your return

Don’t bother filing an amended return for items that don’t make a significant difference.

For example, if you find a $5 charitable contribution receipt, it’s not worth your time to file again. In some cases, for example if you don’t owe any tax, additional income or deductions may not change your tax liability at all.

If you calculated your return by hand, and you later discover a minor math error, the IRS will fix it for you. You don’t need to do anything.

How to file an amended return

Filing an amended return may be easier than you think. You don’t have to start over.

Instead of fixing your return or filing a new one, you file Form 1040X to change items on the return.

Page 1 of Form 1040X shows three columns for the major amounts from your tax return: Original amount or as previously adjusted; Net change – amount of increase or decrease; and Correct amount.

You must attach corrected schedules to Form 1040X as necessary.

To file Form 1040X in TaxACT, click Amend Federal Return under the main Filing tab.

You cannot efile an amended return. You must print it out and file it by mail.

Don’t forget your state return

A change to your federal income tax return will almost always affect your state income tax return. If you live in a state with a state income tax, you must amend both returns.

What if I owe money? Will I have to pay a penalty?

If it’s after April 15 and you discover you underpaid your taxes, you may very well owe a penalty plus interest.

However, if you have good cause, such as erroneous information sent to you, be sure to attach a statement with your amended return and ask for an “abatement” of the penalty.

The IRS often grants abatements when taxpayers attempt to correct problems as soon as possible.

If you owe more tax because of a mistake on your return, the sooner you file and pay the tax, the less penalty and interest you will have to pay.

How long do I have to file an amended return?

You don’t have forever to fix mistakes or omissions on your return.

You generally must file an amended return within three years of the date you filed the original return, or within two years of the date you paid the tax, whichever is later.

Would you amend a tax return to get an additional $50 back? How about to get $200 back?

Photo credit: Hometown Beauty via photopin cc

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About Sally Herigstad

Sally Herigstad is a certified public accountant and personal finance columnist and author of Help! I Can't Pay My Bills, Surviving a Financial Crisis (St. Martin's Griffin). She writes regularly at CreditCards.com, Bankrate.com, Interest.com, RedPlum, and MSN Money. She is an experienced speaker and a member of Toastmasters International. Follow Sally on Twitter.