Should you file amended tax returns?
The answer to that question is Maybe. The IRS allows amended tax returns, but they don’t always require just filed tax returns to be amended. Why, when and how should you amend?
First things first.
Amended U.S. individual tax returns are filed on Form 1040X and cannot be e-filed.
Reasons to file amended tax returns include:
- changing your filing status;
- to correct income, deductions or credits;
- if you are filing because you are due more refund from your original return, wait until you receive it before filing to claim an additional refund. Your amended return could take up to 16 weeks to process. Be sure to attach any additional IRS forms or schedules to make these changes to your Form 1040X.
- if you are filing because you owe more taxes, file your amended return as soon as possible and pay the tax due as soon as you can to avoid possible penalties and interest. Be sure to attach any additional IRS forms or schedules to make these changes to your Form 1040X.
- conflicting information received on a second 1095-A Health Insurance Marketplace Statement; some changes could result in a required amendment, others may not. Review carefully.
There are also reasons not to file an amended tax return:
- math errors which the IRS will automatically correct,
- W-2 forms not attached (the IRS received copies when you did)
- schedules not attached, which the IRS will request if needed
Another consideration that could result in not amending your return is if you think you may have made an error. If you filed your return as accurately as possible and to the best of your knowledge at that time, you’re probably better off, or safe, in not filing amended tax returns. This is a good example of wanting to file an amendment, but the IRS not requiring you to do so. In some cases, filing in this situation could cause more confusion and delay than simply leaving the return as originally and honestly filed.
Tips to remember if you decide to amend your tax return include:
- It can’t be e-filed. Form 1040X must be mailed.
- There is a three-year time limit beginning from the date you filed your original tax return to filing amended tax returns to claim a refund.
- Separate forms are required for each year. Each amendment should be mailed in separate envelopes and clearly note the tax year of the return you are amending at the top of each Form 1040X. Check the form’s instructions for where to mail your return.
Generally speaking, the only way to fix mistakes is by amending your return, but there are occasions and options which can open odd exceptions. These could include actions such as:
- filing a ‘superseding’ return which, in effect causes ‘errors’ of the original return to have not happened; or
- amending or not amending based on the IRS recommendation that you should amend although you’re not actually required to file an amended tax return; and here’s another interesting one;
- waiting until 60 days before the three-year statue runs out before filing your amended return which shows an increase in tax.
Tax Preparation, or your tax and financial lifestyle, make up the architecture and foundation upon which your tax filing is built. Tax filing should be nothing more than the act of presenting to the IRS and other tax authorities the results of your preparation and lifestyle.
The very fact that you have questioned or doubt the validity of your original tax return is an excellent reason to seek help from a CPA tax professional.
What’s the bottom line?
Many tax professionals file their clients’ taxes and merely “report what happened.” As your CPA tax professional, I help you engineer your Tax Preparation (your tax and financial lifestyle) so that the information presented in your tax filing process is controlled by these carefully made and executed plans. In other words, “We make the news; we don’t just report it.”
If you want to “make the news” during your 2017 tax year, contact me and we’ll make it happen. 479-478-6831