Amended Tax Return: Who Needs To File One, How, and When

What Is an Amended Return?

An amended return is a form filed in order to make corrections to a tax return from a previous year. An amended return can correct errors and claim a more advantageous tax status, such as a refund. For example, one might choose to file an amended return in instances of misreported earnings or tax credits. Mathematical errors, however, do not require amendments because the IRS automatically corrects for such errors when processing the tax return.

Who Should File an Amended Return?

All taxpayers are required to file their taxes annually for the previous tax year. Taxpayers may realize that they made a mistake in filling out their tax forms, or their circumstances may have changed after they have submitted or mailed a return that has been accepted by the government. If this occurs, the Internal Revenue Service (IRS) has provided a way for these individuals to redo their taxes by providing an amended return form, Form 1040-X, on the IRS website.

Not all errors need amending by the form. The IRS will spot and correct a mathematical error, for example, when the initial tax return is sent in for processing. When this happens, any refund owed will be adjusted and any extra tax liability due will be billed to the taxpayer. In the event that the individual fails to include a required form or schedule in their submitted original tax return, the IRS will send a letter requesting that they mail the missing information to one of their offices.

When to File an Amended Return

A taxpayer must file an amended return if:

• The taxpayer’s filing status for the tax year changed or was incorrectly entered. For example, if an individual filed as single but actually got married on the last day of the tax year, they will need to amend their return by filing their taxes under the appropriate status—married filing jointly (MFJ) or married filing separately (MFS).
• The number of dependents claimed is inaccurate. An amended return will be necessary if a taxpayer needs to claim additional dependents or remove dependents that were previously claimed. For example, a couple may have included a baby born in January before taxes were filed in April on the prior year’s tax return. That baby cannot be included on the previous year’s tax return because they were not born before the end of the year.
• Tax credits and deductions were claimed incorrectly or were not claimed. In the latter case, the taxpayer may have realized that they qualified for a credit or deduction and may want to file an amended return to reflect this.
• The income reported for the tax year was incorrect. If a taxpayer receives additional tax documents for the tax year (say a Form 1099 or a K-1 arrives in the mail after the tax deadline), they may file an amended tax return to report the additional income.
• Deductibility of certain expenses change as a result of legislation changes. Sometimes, legislation will come through after a taxpayer has filed a return that affects the deductibility of certain expenses. For example, the deduction for private mortgage insurance (PMI) originally expired on Dec. 31, 2017, due to the Tax Cuts and Jobs Act of 2017. The Consolidated Appropriations Act, signed into law in December 2019, extended the deduction through Dec. 31, 2020. This made the deduction available for the 2019 and 2020 tax years and retroactive for the 2018 tax year.
• Tax relief due to a natural disaster changes the taxpayer’s tax liability. This is a common issue for taxpayers who have been affected by a natural disaster, especially one in the later part of the tax year. The government frequently offers tax relief for those affected by natural disasters, but legislation may take longer to finalize than the typical tax season window allows. Taxpayers should pay their full tax liability as it sits when the tax return is due. If legislation changes, an amended return can be filed to reclaim any refund owed to them due to natural disaster tax relief.
• The taxpayer realizes that they owe more taxes than they actually paid. To avoid getting hit with a penalty from the government, they can file an amended return with the IRS.

How to Amend a Tax Return

Form 1040-X has three columns: A, B, and C. Under column A, the figure that was reported in the original or last-amended tax form is recorded. The taxpayer will need to input the adjusted or correct number in column C. The difference between columns A and C is reflected in column B. The adjustments made to a tax return will either result in a tax refund, balance due, or no tax change. The taxpayer also has to explain what changes they are making and the reasons for making each change in a section provided on the back of Form 1040-X.

Disadvantages of an Amended Tax Return

The drawback of filing an amended tax return is that Form 1040-X cannot be submitted electronically for every tax year, although the IRS has recently started accepting e-filed amended returns for tax year 2019. If filling out the form manually, the taxpayer has to mail the printed-out document to the IRS Service Center that processed the original tax form. The IRS manually processes amended returns, and the process can take 16 weeks—or even longer, if the amended return is not signed, is incomplete, has errors, requires additional information, needs clearance by the IRS bankruptcy department, has been routed to another specialized area, or has been affected by identity fraud.

There is, however, a three-year statute of limitations for issuing tax refund checks. Therefore, the taxpayer must file any amended returns that will result in a tax refund within three years after the date they filed the original tax return. An amended return filed to account for additional income or overstated deductions does not fall under any such statute and can be filed at any time.

Download Amended Tax Return Form Here

All current and prior revisions of the IRS Form 1040-X are available on the IRS website here.