Amended Return

MoneyBestPal Team
A form filed with the tax authority to make corrections to a previous year’s tax return.

An amended return is a document submitted to the taxing authorities to fix errors on a tax return from a prior year. Depending on the adjustment, the revised tax return may result in a higher tax advantage or lower tax obligation. 

In order to file an updated return in the US, an individual must complete a "Form 1040-X," and a business must complete a "Form 1120X."

Some of the reasons why an individual or a corporation may need to file an amended return are:
  • The filing status of the taxpayer for the tax year changed or was entered improperly. For instance, if a person filed their taxes as single but then got married, they will need to modify their return and file their taxes as either Married Filing Jointly (MFJ) or Married Filing Separately (MFS).
  • The claimed number of dependents is incorrect. If a taxpayer has to add more dependents or drop dependents that were previously claimed, an updated return will be required. For instance, a couple might have included a child born in January on the tax return for the year before taxes were due in April. Because they weren't born, that baby cannot be claimed on the tax return for the prior year.
  • Tax deductions and credits that were incorrectly claimed. If a taxpayer failed to claim a tax credit or deduction for which they qualified or did so while also claiming one for which they were ineligible, an updated return will be necessary. For instance, a taxpayer may have neglected to claim the earned income credit or the child tax credit, or they may have claimed a business expense that wasn't deductible.
  • incorrect income disclosure. If a taxpayer recorded more or less income than they actually made, an updated return will be required. A taxpayer might have found an error on their 1099 form from their bank or brokerage, for instance, or they might have received a corrected W-2 form from their employer after submitting their initial tax return.

Even after the tax filing deadline for the given tax year has passed, an amended return may still be submitted. The issuance of tax refund checks is subject to a "three-year statute of limitations." This means that if a taxpayer expects to receive a refund from their amended return, they must file it within three years of the tax return's initial due date or within two years of paying the tax, whichever comes first. If a taxpayer owes additional tax as a result of their revised return, they should pay it right away to prevent interest and penalties.

Taxpayers can use the "Where's My Amended Return?" function on the IRS website to look up the status of an amended return. The program can offer data for up to three past years' revised returns in addition to the current year. The instrument will indicate whether the updated return has been received, handled, or finished by the IRS. If the taxpayer needs further information, the application will also suggest that they get in touch with the IRS.

The procedure of submitting an updated return can be difficult and time-consuming. Before submitting an updated return, taxpayers should seek advice from an experienced tax professional to be sure they are following the right steps and getting the most out of their tax benefits.