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Tips For Filing an Amended Return

by | Mar 1, 2024 | 2024, Accounting, Tax planning, Taxes | 0 comments

So, you submitted your tax return on time and intended to forget about taxes for another year. But you’ve recently uncovered an error on your federal tax return. What are you doing? Do you submit a fresh return with the Internal Revenue Service and advise them to disregard your previous return? Do you correct errors on your tax return? Do you have a punishment for making a mistake?

Do not worry. The IRS permits you to modify your return even if you make a major error, such as omitting to include your Form W-2 wages. The IRS has seen everything before. Unless you committed fraud or tax evasion, they would not hold it against you.

We will guide you through the “Four Ws” (What, When, Why, and Where) of amending a tax return and make recommendations to avoid the need for an amendment.

Why file an amended tax return

You discovered a mistake on your first federal return? Have you entered your Social Security number incorrectly? Did you check the wrong box for your filing status? Did you just make an error while completing your Form W-2 wages? Have you forgotten to report a charity gift or other tax deduction?

Not all errors are created equally. Some mistakes are worthy of correction, while others are not.

Errors deserving of correction include:

  • A significant noncash contribution.
  • Additional Business Deductions
  • Income, such as unemployment benefits, that you didn’t realize you needed to disclose.
  • A rectified form from your employer, financial institution, or partnership.
  • Incorrect Social Security number for yourself, spouse, or dependent

Other minor mistakes do not warrant updating a tax return. For example, if you discovered a little $20 ticket for a charitable gift or extra mileage for a work trip, it is not worthwhile to modify your return.

When to file the amendment

When you uncover an error, file an amendment. Do not wait. Filers do not have unlimited time to modify their tax returns. You typically have three years to revise your tax return. If you paid tax after filing your original return, you only have two years to make an amendment.

If you need to make changes to more than one year’s tax return, you must file a separate amendment for each.

If you realize you have missed a tax credit for multiple years, you may usually only amend returns for the previous three years to claim a tax refund.

For example, you recognized you were eligible for the Earned Income Tax Credit (EITC) but did not claim it. The EITC is a refundable tax benefit. So, even if you don’t owe taxes, you might make an amendment and request a refund.

Other tax benefits, such as the child care or dependent care credit, are not refundable. As a result, if you owe no taxes, there is no need in seeking an amendment for these unclaimed credits.

Note: If your modification is to claim an extra tax refund, you must wait until you get the initial refund before completing the updated tax return.

What to file when amending your return

Do not file a new tax return; instead, amend an existing one!

Filing an updated federal tax return may be easier than you think. You don’t need to start anew. Instead of resubmitting your previous return or filing a new one, you use Form 1040X, Amended U.S Individual Income Tax Return, to fix errors.

Most critical, only correct forms that have changed. For example, if you need to adjust your self-employment income on Schedule C, only file Form 1040X with the updated Schedule C. Do not submit any more schedules or paperwork. If you submitted Schedule A with your initial return, do not include it again with your amendment. Simply keep telling yourself that less is more.

Once you’ve reached the amendment steps, follow the instructions and edit your return as necessary.

Remember to include your state return before you complete. Changing your federal income tax return may affect your state income tax return. If you live in an income-tax state, you must modify both returns.

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

If you realize you underpaid your taxes after the tax deadline, you may be required to pay a penalty and interest. Pay the tax owing right away to avoid interest and penalties.

However, if you have a valid reason, such as receiving incorrect information, attach a statement to your updated return and request that the penalty be waived. The IRS frequently awards abatements when individuals try to resolve issues on their own and as quickly as practicable. In truth, the IRS may be rather fair.

Amending your tax return does not raise your chances of getting audited.


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