It is not unusual for a taxpayer to leave a deduction or credit off his original tax return, or find other reasons to amend a tax return, only to learn of it after the return is filed. If that happens, the procedure for correcting the original return is to file a Form 1040X (Amended U.S. Individual Income Tax Return). This form contains a summary of your original and corrected information, with an explanation of the change. The tax is computed under both scenarios, and the difference – in the case of an overpayment with the original return – is refunded.
You can expect the IRS to send you a refund check within three months of filing your Form 1040X.
What If I'm Owed Money?
If you file your tax return and realize you've made a mistake, which results in a bigger refund than you calculated on your original tax return, sit tight and wait until your original return is processed and you receive the initial refund. Then you can file your amended return.
If the IRS receives your amended return before it's processed your original return, your amended return does not replace your original return. Each tax return stands on its own.
The IRS will send you a check for any balance it owes you, based on your amended return, but you may have to wait up to three months to receive the check.
Reasons to Amend a Tax Return
If you discover that your tax return is incorrect, whether you owe the Internal Revenue Service money or it owes you money, you should file an amended return. You can amend taxes after a refund or after paying a tax bill, and the IRS will either issue you an additional refund if the government owes you money or collect your payment if you owe the government money. If you file an amended tax return and owe money, you may be required to pay interest or penalties depending on the circumstances.
If you file an amended tax return and do not include evidence for the amendment, you may increase your chances of being audited. If, for example, you forgot to deduct your real estate taxes, you should send a copy of the real estate tax bill with the amended return. The greater the amount of the refund, the more likely it is you will be audited.
Deadline to Amend Return
The IRS normally has three years to audit a tax return, except in cases of fraud or failure to file. You also have three years in which to file an amended return. If you discover your omission of real estate taxes four years after you filed your original return (including extensions), you are out of luck.
But filing an amended return does not extend the three-year statute. So if you file your original return on April 15, 2016, and your amended return on July 15, 2019, the IRS still has only until April 15, 2019 to audit you.
State Taxes and Amended Returns
If you live in a state that has an income tax, don't forget that you may need to file an amended state tax return as well to reflect the same changes that motivated you to change your federal return. You may be due an additional refund from the state as well if you're due one from the federal government. When in doubt, consult with a tax professional or your state's tax authority.
Tax Law Changes and Older Returns
As of tax year 2018, tax brackets and a number of deductions have changed, so make sure you understand the current tax situation when filing or you may be more likely to need to amend your return later on. Generally in 2019, you can file amended returns for years going back to 2016.
Richard Friedkin has many years of experience as a Certified Public Accountant, a Certified Financial Planner and a corporate CEO. He has been a writer for more than 30 years, writing everything from dense technical memos to whimsical children's stories. Friedkin's work has been published locally and performed on stage.