How Far Back Can You Amend Tax Returns?

You can correct errors on a Form 1040 with Form 1040X.

Form 1040 Tax Forms image by Viola Joyner from Fotolia.com

If you’ve made a mistake on taxes already filed, you can send the IRS an amended return. That’s not the only reason people amend their tax returns, but whatever the reason, you have a limited amount of time to do so.

Tip

Except in limited circumstances, you must file an amended return within three years of the original return's filing date.

Understanding the Amended Return Deadline

The IRS allows taxpayers three years from the date the original return was filed to file an amended return if they are seeking a tax refund or credit, but only two years if taxes were paid. If taxes are owed on the amended return, the taxpayer may face penalties and interest.

You must file Form 1040X for an amended return, and such returns do not qualify for e-filing but must be mailed. if you are filing amended returns for multiple years, each requires a separate form and a separate mailing. The IRS recommends sending the amended forms by certified mail to prove they were filed on time. You must include a copy of your original tax return with the amended return, along with any forms relating to the amendments. Do not correct or submit any forms that do not require changing. Keep in mind that you will likely have to amend your state tax returns for the years in question, too.

Filing an Amended Tax Return After Three Years

In a few limited circumstances, the IRS does allow taxpayers to file an amended tax return after the three-year deadline. The Form 1040X instructions state that the time limit for filing an amended return may be suspended for taxpayers who are “physically or mentally unable to manage their financial affairs.” If the amendments involve a bad debt or worthless security, the return must usually be filed within seven years after the return’s due date for the year in which the item became worthless.

Understanding Your Audit Risk

By statute, the IRS generally has three years after the due date to audit tax returns. While you must file an amended tax return within three years, that does not mean the IRS’ three-year audit timeline starts again. However, when you file an amended tax return and there is an increase in tax, and your amended return is submitted within 60 days of the IRS’ three-year statute of limitations, the IRS must review your amended return within that 60-day window. If your amended return didn’t increase your taxes, the 60-day review doesn’t apply. That doesn’t mean the IRS can’t audit a tax return beyond the three-year deadline, but certain circumstances must apply. The audit timeline doubles to six years when there is a 25 percent or larger understatement of income or basis overstatements when property is sold. If you don’t file a return, or the return you filed is fraudulent, there is no statute of limitations.

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About the Author

A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Financial Advisor, Sapling, nj.com and The Nest.


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