It’s well past April 15th, so unless you applied for an extension, the stress and frustration of filing your federal tax return should be a distant memory by now. But what if you suddenly realize there’s a mistake on your return or new development that affects the amount of tax you should have paid? What do you do now? Whether the mistake or development is in your favor or the government’s, filing an amended tax return is often the next step.
Filing an amended return isn’t particularly difficult, but there are a few things you should know about the process before getting started. It also helps to be familiar with some of the more-common occurrences that can trigger the need for an amended return (in addition to just a mistake). That way, you’ll know to check your previously filed return if and when they happen. Because every taxpayer should have a basic understanding of what it takes to change their return after it’s filed, here are some tips when you need to file an amended tax return.
You Receive New Information After Filing Your Return
You’ll need to file an amended return if you receive information after filing your original return that significantly changes your taxable income. For example, you might receive an amended W-2 a 1099 form showing previously unreported income (enough to make a difference on your return). If the new information affects the deductions or credits that you claimed on your original return—for example, by upping your income to a point where the tax break is reduced or no longer available to you—you’ll need to file an amended return for that, too.
You won’t receive a refund for these types of changes, but you still need to file an amended return to avoid penalties and additional interest.
Changes you make on an amended return affecting your income, deductions or tax liability may also affect the amount of or cause you to owe the alternative minimum tax. So be sure to check that, too.
Claim Missed Deductions or Credits
Now let’s get into some of the more common reasons why you might want to file an amended return. Many people file one to claim an overlooked tax deduction or credit. The tax code is chock full of tax breaks, so it’s easy to miss one that applies to you. If you discover a deduction or credit that you qualify for after filing your original return, simply file an amended return to claim it now and get a refund. It might not be worth the effort if it’s only going to reduce your taxes for that year by a few bucks, but you do have the option.
Also, if you’re amending an older return, remember that the recent tax-reform law changed many tax breaks beginning with the 2018 tax year. Several deductions and credits were eliminated or reduced, but others were added or expanded. So just because you’re entitled to a tax break now doesn’t mean you were entitled to it on your pre-2018 return.
Disaster Victims Can Amend Return to Deduct Losses
If you’re the victim of a hurricane, wildfire or other natural disaster, you might be able to file an amended return to claim a casualty loss deduction for the tax year before the disaster. Alternatively, you can claim the loss in the year of the disaster: Pick whichever year is more favorable to you. However, the loss must be attributable to a federally declared disaster that occurred in an area warranting public and/or individual assistance. Otherwise, this special rule doesn’t apply.
If you decide to claim the loss for the year before the disaster, you must file your amended return no later than six months after the due date for filing your original return (without extensions) for the year in which the loss took place. So, for example, if the disaster occurred in 2019 and you want to claim your loss on your 2018 return, you must file an amended 2018 return by October 15, 2020.
Also note that a casualty loss deduction is generally subject to a $100-per-casualty limit. It also can’t exceed 10% of your adjusted gross income, and you have to itemize to claim it.
Let the IRS Correct Certain Errors
You don’t need to file an amended return if you discover a simple math or clerical error on your return. The IRS can correct those types of mistakes on its own. An amended return isn’t necessary if you forgot to attach a certain form or schedule to your return, either. The IRS will contact you by mail if they need additional information to fix these types of errors. However, you should file an amended return if there’s an issue that changes your filing status, income, deductions or credits.
File Your Amended Return Before It’s Too Late
Generally, you must file an amended return within three years from the date you filed your original return or within two years from the date you paid any tax due, whichever is later. If you filed your original return before the due date (usually April 15), it’s considered filed on the due date. There are a number of special due-date rules for amended returns that are based on changes related to bad debts, foreign tax credits, net operating losses, natural disasters, service or injury in a combat zone, and a few other situations—check the instructions for Form 1040X for details.
Pay Any Tax Owed Right Away
It’s nice if amending your return results in a refund, but, unfortunately, that’s not always the case. If you owe the government money as a result of filing an amended return, pay the tax right away to avoid additional interest and penalties.
You can pretty much count on paying some interest, since the IRS charges interest on any taxes not paid by the due date. But you can minimize the amount of interest you’ll be charged by paying the tax owed quickly. The interest rate changes on a quarterly basis (it’s 5% for the third quarter of 2019).
You’ll also pay a penalty if you don’t pay any tax due within 21 calendar days of the date of the IRS’s request for payment (10 business days if the amount of tax is $100,000 or more). The penalty is usually equal to 0.5% of the unpaid amount for each month or part of a month that the tax isn’t paid. However, the IRS might waive the penalty if you have a (very) good reason for not paying your tax on time.
There are several ways to pay any tax due. You can pay online or by phone, mobile device, cash, check or money order (see the instructions for Form 1040X for details). If you can’t pay the full amount right away, the IRS recommends asking for an installment agreement that will allow you to make monthly payments. You’ll still pay interest and penalties, and probably a fee to set up the agreement. Other, potentially less costly alternatives include bank loans or credit card payments.
You Can Track the Status of Your Amended Return
You can track the status of your amended return online using the IRS’s “Where’s My Amended Return?” tool or by calling 866-464-2050. You can get the status of your amended returns for the current tax year and up to three prior years. The automated system will tell you if your return has been received, adjusted or completed. All you need is your Social Security number, date of birth and zip code to access the system. It can take up to three weeks from the date you mail your amended return for it to show up in the IRS’s system. After that, it generally takes eight to 12 weeks for an amended return to be processed, but in some cases it can take 16 weeks or longer—so you have to be patient.