Donít Freak Out! You Can File an Amended Tax Return

The stress of Tax Day may have come and gone…but then you receive a W-2, K-1, or 1099 Form in the mail documenting income that you forgot about. Or perhaps you just realized you qualify for a credit that you didn’t claim.

If you realize your tax liability is different from what you claimed on your tax return, you have the option of filing an amended tax return.

Reasons to file

Reasons to file an amended tax return include: missed income from a W-2, 1099, or similar form; a wrong filing status; fewer or additional dependents; a change in head-of-household status; and changes to deductions or personal exemptions. In short, when correcting information on your return would change your tax calculations.

What you don’t need to file an amended tax return for are math errors. The IRS will double check your math and make any corrections without a penalty to you.

Form 1040X

Form 1040X is what you will file for your amendment. It will summarize the information you're changing. To fill it out, you’ll need your original returns and any new documentation to support your requested changes. You’ll have to file separate 1040X forms for each year you want to revise.

Perhaps the most important section of Form 1040X is Part III, where you explain the changes you’re making to your initial tax return. You want to be clear and concise and provide any documentation you can to support your changes. If the IRS needs more information, they’ll send you a letter asking for specific documentation.

Unlike the other 1040 forms, 1040X cannot be e-filed and must be snail mailed to the IRS. Processing your amended return usually takes from 8 to 12 weeks.

You should wait to receive your initial refund before filing your amended return.

You owe the IRS, or the IRS owes you

If you discover through your amended return that you’ll be receiving (or received in the past three years) a larger refund than you should have, you’ll need to pay the IRS back the difference. Do this with a check sent through the mail. The sooner you send it, the better chance you have of avoiding penalties and interest on the money you owe.

Now, if you’re the one who’s owed money, you should receive a check from the IRS in that 8-to-12-week window after filing the amended tax return. Refunds from amended returns can't be issued via direct deposit, unfortunately. If you’d rather, the IRS can apply all or part of your refund to next year's estimated tax.

Statute of limitations

You have three years to make any corrections to past tax returns in order to get an additional refund. This is called a statute of limitations. And it works both ways: the IRS has three years to discover if you’ve underpaid them (unless there's been substantial under-reporting of income). The three-year period begins on April 15, if you filed on time, or from October 15, if you filed an extension.

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