Amending Your Tax Return – Rules, Form 1040X and Deadlines

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So you have submitted your tax return and at some stage down the road you notice that you forgot to claim one of the many stimulus credits or qualified deductions. You may think that this money is gone now that your return has been submitted but you would be wrong; since you can actually send an amended return and claim this extra cash. The IRS will process – free of charge – your amended return and then pay you back what you are due. On the flip side if you owe more than you paid with your original April 15 filing, then you should still file an amended return with the extra tax payments. Most likely you will also have to pay a fine or penalty as well – which will be lower the sooner you pay the extra taxes. Also it is better to fess up an pay early rather than face an IRS audit which will pick up these overdue tax payments

Here are the key factors to keep in mind with amended tax return filings:

- What you can and cannot file an amended return for. You should file an amended return if you discover any of the following items were reported incorrectly: filing status, dependents, total income, deductions or credits. You usually do not need to file an amended return because you forgot to include tax forms such as W-2s or schedules. The IRS normally will send a separate request asking for those documents.

- Once you have submitted your federal income tax return, you can no longer change that return. (One exception: If your e-filed tax return is rejected, you can make changes before sending it in again) If you want to make changes after the original tax return has been filed, you must file an amended tax return using a special form called the 1040X – Amended U.S. Individual Income Tax Return, entering the changes and explaining why you need to amend your original tax return. You don’t have to redo your entire return, either. Just show the necessary changes and adjust your tax liability accordingly

- Deadlines to File the Amended return. You generally must file an amended return within three years of the date you filed the original return or within two years after the date you paid the tax, whichever is later. Be sure to enter the year of the return you are amending at the top of Form 1040X

- You can use e-tax preparation software to amend your return. In fact, TurboTax walks you step-by-step through amending your federal income tax return. However you still need to file and mail the amended return using Form 1040X manually. The IRS isn’t set up to accept an amended returns electronically.

- If you are amending more than one tax return, prepare a 1040X for each return and mail them in separate envelopes to the IRS office for the area in which you live. The 1040X instructions list the addresses for the campuses. If the changes involve another schedule or form, you must attach it to the 1040X.

- Amending your state tax return. First, fill out an amended federal income tax return, Form 1040X. Then, get the proper form from your state and fill it out. Like the IRS, your state uses a special form for an amended return. Many states also use the X suffix for the form number. For example, California uses Form 540X and Hawaii uses Form N-188X. Don’t forget to attach a copy of your amended federal return (Form 1040X) to your amended state return.

- If you owe additional taxes for a past tax year, you should still file. Form 1040X and pay the tax as soon as possible to limit interest and penalty charges. Interest is charged on any tax not paid by the due date of the original return, without regard to extensions.

Sources: TurboTax, IRS

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{ 2 comments… read them below or add one }

Danny Fugate June 8, 2010 at 7:25 am

I have a question concerning early withdrawal of retirement funds. My wife had filed for disability in early 2009 and in June of the same year we had to withdraw money in her name from the retirement fund in order to survive. This year we filed our tax return and paid the 10% penalty for the money withdrawn. In May of 2010 she was approved for 100% disability by a federal judge which dates back to 2008.

My question is this: Can we file an amended return and send the order for disability to the IRS and recoup the 10% penalty we paid?

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andys2i June 8, 2010 at 9:13 am

I cannot see why not. However you should contact the IRS or check with a local accountant to make sure you file the appropriate paperwork.

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