Amended Tax Return: When and How to Do It

Marketing disclosure: I may receive a fee if you choose to use linked products and services.

An amended return is redoing your taxes. You may need to amend your return if you realize you’ve made an error or if the IRS audits your tax return but their changes aren’t 100% correct either.

What is an amended return?

An amended return is essentially resubmitting your entire tax return. It’s different from other types of changes where the IRS may send you a notice or letter requesting additional information about a single item on your tax return.

An amended return is also generally voluntary. Instead of the IRS asking you to file a corrected Form 1040, you would generally do so after realizing you made a mistake on your original return.

When do you need to file an amended return?

There are several circumstances when you may need to file an amended return.

  • You noticed a mistake right after you filed. You shouldn’t just send a second return, and if you e-filed, the IRS won’t accept a second return.
  • You learned a filed form you received from a third party was incorrect.
  • You forgot to include income or learned that income you didn’t report was taxable.
  • You forgot to include or learned about deductions or tax credits you didn’t take.
  • You received a notice or letter from the IRS, don’t agree with their calculation of what you owe, but no longer believe your original return is completely accurate.
  • You included income or deductions in the wrong year.
  • You need to add deductions or credits that carry back to prior years or carry forward to future years.

What happens if you don’t file an amended return?

What happens if you don’t amend your return depends on what you owe.

  • If you would have owed additional tax, the IRS will charge interest and penalties through the date you finally pay the tax. If the IRS believes you were aware you owed additional tax but didn’t amend your return, it may also pursue additional civil or criminal penalties.
  • If you originally overpaid and the amended return would have resulted in a refund, you will lose the right to claim that refund.

Should I amend my return for a small amount?

If you believe the IRS owes you money, it’s generally up to you to decide how much you’re willing to let the IRS keep to avoid amending.

If you believe you owe more, keep in mind that the IRS may figure it out eventually. You may owe years worth of interest and penalties when the IRS finally audits your return.

How long do you have to file an amended return?

In most cases, you have three years from the date you filed your original return. If you filed early, you get three years from the actual due date.

  • If you paid late, you may also be able to amend your return up to two years from the date you paid. This applies even if it’s beyond the usual three-year rule.
  • If you need to go back and write off a worthless security or business bad debt, you get up to seven years.
  • If you have a net operating loss or a tax credit from a net operating loss carryback, you can amend affected prior years up to three years after the due date for the year of the loss.

How quickly can you file an amended return?

If you make a mistake on your taxes and notice right after you file, you generally need to  wait until the IRS accepts your tax return. While your amended return will usually get to them slower than your original return, it may cause problems if they try to process it before your original return.

You should not try to file a new tax return. If you file electronically, the IRS computer will automatically reject it. If you file by mail, the IRS will still generally reject a second tax return.

Does an amended return increase your chances of an audit?

Some tax experts believe amending increases your chances of an audit, but there’s no clear data to support this. The IRS only says that filing an amended return by itself does not trigger an audit.

IRS employees manually review all amended returns rather than computers. However, this is primarily for reasonableness and accuracy. This is not as thorough as an audit, and the people doing the review are not auditors.

The bottom line: If you’ve done your best to complete your original tax return accurately and have the supporting documents you need, don’t leave money on the table by not amending because you’re afraid of an audit. If the IRS does ask for additional information, you can just explain why you’re right.

Does an amended return result in fees or penalties?

The IRS does not charge a fee for amended returns.

You may have to pay interest and late payment penalties on any additional tax that you owe if you’re amending and paying after the original return due date. However, this will almost always be less than the interest, failing to pay, and accuracy penalties the IRS will impose if you don’t amend and it discovers you owe additional tax.

How do you file an amended return?

There is a special form for filing an amended tax return. For personal returns, this is Form 1040X. Form 1040X is similar to Form 1040 but has spaces to show the changes.

The amended return form is similar to the original return form but has three columns: the original amount, the new amount, and the difference. You calculate the new amounts by redoing any forms and schedules that you need to change. Include these with your amended return.

You must file an amended return by mail. It cannot be electronically filed. Pay any amount you owe online or by mailing a check to the address in the form’s instructions.

Because this is a complicated process, there’s less software available to help you, and you may be facing interest or penalties, you may want to have a tax professional help you with your amended return.

Can tax preparation software help you file an amended tax return?

TaxAct is one of the few online tax solutions that allows you to create an amended return. You can generate a Form 1040-X by editing your original return and then selecting the amended return option at the end. If you used other tax software, you can enter your original return then enter the changes to create a 1040-X.

Most other tax software either doesn’t handle amended returns or charges a much higher fee than originally filing your return. If you still have access to your original software, another option is to redo your tax return using that software. You can’t file what the tax software gives you since it’s a Form 1040, but you can compare the new 1040 to your original tax return and use it to fill out Form 1040X by hand.

How do you track the status of an amended return?

Use the IRS Where’s My Amended Return tool to check the status of your amended return. Since this is a mailed form, it takes at least three weeks for it to show up in the tracking system. The IRS takes up to 16 weeks to process amended returns. It may take another 4-6 weeks after processing to receive your refund if you’re owed one. You can review the IRS instructions for Form 1040X here.

COVID-19 may delay updates and processing of your amended return. The IRS has been months behind on mailed returns due to related delays. If your amended return isn’t showing up in the tracking tool, it may be sitting in a truck or warehouse waiting for IRS employees to catch up on their backlog. Use certified or priority mail if you want to know whether your amended return was delivered.

Need personal help? Click here for additional free resources or to find an accountant, attorney, or other professional near youRemember: This blog post and the comments provide generalized information that may be out of date or inaccurate for your situation. Always schedule a personal consultation with an appropriate licensed professional in your area before taking action. For full terms of use, click here.

Have general questions about this post or want to learn more about a related topic? Please leave a comment at the bottom of the page. Comments are public, and I can’t provide individual advice, but it helps me make the posts more useful for the future. Please do not post personal information. If you need personal assistance, please contact the relevant government agency or hire an appropriate professional near you.

Be the first to comment on "Amended Tax Return: When and How to Do It"

Leave a comment

Your email address will not be published.