Amended Tax Returns You Don’t Always Need to File One

Everyone makes mistakes. And, sometimes you don't even realize you’ve made one or it’s too late to change something. But what if you suddenly realize there's a mistake on a tax return that you filed months (or years) ago? Or, what if there's a new development that affects the amount of tax you should have paid on a previous return? What do you do then? Whether the mistake or development is in your favor or the government's favor, filing an amended tax return is often the next step.

Filing an amended return isn't particularly difficult, but there are a few things you should know about the process before getting started. It also helps to be familiar with some of the more common occurrences that can trigger the need for an amended return—in addition to just a mistake. That way, you'll know to check your previously filed return if and when they happen. Because every taxpayer should have a basic understanding of what it takes to change their return after it's filed, here are some tips on how and when to file an amended tax return.

1. Let the IRS Correct Certain Errors

You don't need to file an amended return if you discover a simple math or clerical error on your return, as the IRS will correct those types of mistakes. An amended return isn't necessary if you forgot to attach a certain form or schedule to your return. The IRS will contact you by mail if they need additional information to correct these types of errors. However, you should file an amended return if there's an issue that changes your filing status, income, deductions, or your credits.

2. Use Form 1040X

If you do need to file an amended personal income tax return, you'll probably need to submit IRS Form 1040X, which is used to do the following:      

• Correct Forms 1040, 1040A, 1040EZ, 1040NR or 1040NR-EZ (some of these forms are no longer in use)
• Make certain elections after the election deadline
• Change amounts previously adjusted by the IRS (except IRS changes to interest or penalties)
• Claim a loss or unused credit carryback.

You can use Form 1045 instead of Form 1040X in limited situations. For example, Form 1045 might be an option if you had to repay income that was previously taxed or you're carrying back certain losses or tax credits. You should also use Form 843 if you're requesting a refund of penalties and interest or an addition to tax that you’ve already paid. Otherwise, we suggest you just use Form 1040X.

Also make sure that you file a separate Form 1040X for each tax year and submit them separately also. If filing a separate return, check the box at the top of the form to indicate the tax year for the return being amended. If there isn't a box for that year, write in the year in the space provided.

Don't forget to sign the amended return. Attach any required forms or schedules as well. Generally, you need to attach any schedule or form relating to the changes you're making. For example, attach Schedule A if you're changing an itemized deduction. The form instructions tell you which other attachments are necessary.

3. File Your Amended Return Before It's Too Late

Generally, you must file an amended return within three years from the date you filed your original return, or within two years from the date you paid any tax due, whichever is later. If you filed your original return before the due date (usually April 15th), it's considered filed on the due date. There are a number of special due-date rules for amended returns that are based on changes related to bad debts, foreign tax credits, net operating losses, natural disasters, service or injury in a combat zone, and a few other situation. Be sure to check the instructions for Form 1040X for details.

Also, don't file your amended return too quickly, though. If you're due a refund on your original return, wait until you actually receive the refund before filing an amended return for that tax year.

4. Pay Any Tax Owed Right Away

It's nice if amending your return results in a refund, but unfortunately, that's not always the case. If you owe the government money as a result of filing an amended return, pay the tax right away to avoid additional interest and penalties.

You can pretty much count on paying some interest, since the IRS charges interest on any taxes not paid by the due date. But you can minimize the amount of interest you'll be charged by paying the tax owed quickly. The interest rate changes on a quarterly basis is 3% for the third quarter of 2020.

You'll also pay a penalty if you don't pay any tax due within 21 calendar days of the date of the IRS's request for payment (10 business days if the amount of tax is $100,000 or more). The penalty is usually equal to 0.5% of the unpaid amount for each month or part of a month that the tax isn't paid. However, the IRS might waive the penalty if you have a very good reason for not paying your tax on time.

There are several ways to pay any tax you may owe. You can pay online or by phone, mobile device, cash, check, or money order (see the instructions for Form 1040X for details). If you can't pay the full amount right away, the IRS recommends asking for an installment agreement that will allow you to make monthly payments. You'll still pay interest and penalties and probably a fee to set up the agreement. Other, potentially less costly alternatives include bank loans or credit card payments.

5. You Can Track the Status of Your Amended Return

You can track the status of your amended return online using the IRS's "Where's My Amended Return” Tool or by calling 866-464-2050. You can get the status of your amended returns for the current tax year and up to three prior years. The automated system will tell you if your return has been received, adjusted, or completed. All you need is your Social Security number, date of birth, and your zip code to access the system.

It can take up to three weeks from the date you mail your amended return for it to show up in the IRS's system. After this time, it generally takes eight to 12 weeks for an amended return to be processed, but in some cases it can take 16 weeks or longer—so you will need to be patient.