Three Reasons You May Need to Amend Your Tax Return
Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
It’s not a great idea to amend tax returns needlessly. The IRS can only audit you for three years after you file a tax return. When you amend a return, however, you start that three-year clock running again. There may be things that you can no longer prove or that are too complicated to explain.
However, there are some circumstances that may prompt you to amend your return. Here are three of them:
1. You didn’t include a W-2 or 1099 because it came after you filed your tax return. You can file an amended return and pay the additional taxes immediately in order to limit any interest and penalty charges you could accrue.
If you don’t amend your return, the IRS may send you a letter six to 10 months after you file. It will compute the additional taxes you owe and inform you that you can pay those taxes, plus interest. The interest is charged from the due date of the return until the date of payment.
2. You overpaid your taxes. If you filed your 2013 taxes and then found better information about deductible expenses or better proof of the basis (tax cost) of something you sold, you should definitely file an amended return. Wait until all information surfaces that might affect this tax return so you only need to amend it once.
3. You had a substantial net operating loss this year and did not include a statement saying that you wanted to waive the carryback period. Here, you have two choices. You can make that election by filing an amended return within six months of the due date of the original return. For example, if you filed in February, you may amend your return until six months after April 15. You may want to waive the carryback if you’ve paid no taxes in the past or if you don’t want to open up previous years’ returns to an audit.
On the other hand, you have the option to use the carryback and get your refund quickly. File Form 1045 by December 31 of the year in which you filed the original return. It has columns to compute the refunds for each of the two prior years. IRS Publication 536 takes you through this, step by step.
How do you file a regular amended return?
Use Form 1040X. Attach a copy of the relevant pages of the original tax return, marked “original,” and a copy of the relevant pages of the revised tax return, marked “amended.” Often, your tax software company can help you with this, and you may even be able to file it electronically.
Be sure to include any pertinent documents or calculations with the 1040X. A person, not a computer, will process the form. Think of this as a mini-audit. It will take about four to six months to get your refund, but follow up with the IRS after 60 days to make sure it has received your amended return. You can make this easier by using its new tool: Where is my amended return?
How to avoid making mistakes on your return
To avoid making mistakes on your tax return in the first place, get ready well before the return is due. Identify all of your income sources—including jobs, side businesses, securities sales, and dividends—and all of your expenses, including mortgage interest, charity, and medical expenses.
(Read more: Filing Taxes: Oops! I Made a Mistake!)
There’s no reason not to get organized all year long. There are many apps and tools to help you, so it’s easy to track your information throughout the year.
Before filing your tax return, look it over thoroughly. If you don’t understand something, ask your preparer. If you used software, ask tech support. Try not to file the tax return unless you have all of the answers you need first.
If you have run out of extensions and are still missing information, though, file the tax return and make your best guess about the missing numbers. You have up to three years to file an amended return and give the IRS and state the correct information. Doing this helps you avoid the hefty 5 percent per month late filing penalties.
Eva Rosenberg, EA is the publisher of TaxMama.com ®, where your tax questions are answered. She is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.