Rules To Follow When Amending Tax Return

Ideally, you should file once and do that correctly.

However, if you want to or have to make amendments, the following are some rules you should be aware of.

Amended Returns Aren't Mandatory

You may not know this but you are not obligated to file amended returns.

A tax must be filed every year with the Internal Revenue Service (IRS) if your earnings are over the required level.

You could be prosecuted for not filing, or filing incorrect details intentionally.

Compared to fraudulent filing, failing to file comes with smaller penalties.

But once having filed return, you cannot be prosecuted for not filing an amended return, even if your original tax return has errors.

Therefore, ask yourself whether the return files were accurate.

If yes, you are most likely out of trouble for not having filed an amendment.

Corrections Can't Be Made Selectively

An amended return need not be filed.

But if you're filing one, you would have to amend everything.

In other words, you cannot correct things that fetch you money, and ignore corrections that may heighten your tax liability.

Certain Errors Do Not Need Amendment

If your tax return errors are purely clerical or computational, filing an amended return is not necessary as the IRS would take care of those.

Similarly, you must usually not file an amended tax return if you did not attach schedules, omitted Form W-2, or made other similar glitches.

The IRS could process your tax return sans them, or would request them if required.

Timing Matters

Most individuals recommend amendments within 3 years of having filed the original return or within a couple of years from the tax payment date, whichever is later.

Only Paper

Form 1040X is used to prepare amended returns.

You should be using this tax form whether you have filed Form 1040, 1040EZ, or 1040A before.

Amended tax returns should be filed only on paper.

And this rule applies even if your original tax return was filed electronically.

Each Year Must Be Amended Separately

If you're amending multiple tax returns, prepare separate 1040X forms for every return you file.

And kindly note, when compared to original returns, amended tax returns would probably undergo much more stringent scrutiny.

Application of Refunds to Estimated Taxes

If you're filing an amended tax return seeking significant money in return, the IRS could get more cautious with reviewing the application.

However, you can apply a part or all of your refund to current year tax.

Statute of Limitations

Generally, the IRS is expected to audit a return in three years.

You may assume that an amended return filing will restart the three-year duration.

But that's not how it works.

In fact, in case your amended tax return exhibits a tax increase, and the amended tax return is submitted within 60 days prior to the three-year period, the IRS would then only have 60 days post receiving the amended return for making an assessment.

Within this narrow window, you could plan things.

Some individuals amend a tax return right before statute expiration.

About the author
Margaretha Valderas