Tax season is over and you might think that you can rest easy now that your return has been filed but that’s not always the case. Sometimes you need to file an amended tax return, whether you realize it or not. Here are some of the common reasons for filing an amendment.
Misplacing Numbers and Math Errors
It’s very easy to misplace a number or make a rounding error if you’re preparing your own return, such as entering $25,000 as $52,000 or $100 as $1,000. You may also realize after you filed your return that you accidentally understated or overstated your deductions, and even the most meticulous checking can still have an accidentally transposed number and it must be fixed by filing an amended return.
Omissions and Receiving Forms Late
If you didn’t include an income item– or deduct an expense– on your tax return because you thought you didn’t have to report it or that it wasn’t allowable, you will need to file an amended return to account for it. This is also true if you receive a form after you initially filed your tax return as well, and are required to report the item in question.
Receiving a Corrected Tax Form
This is the most common with employees who receive bonuses that were not originally accounted for on their initial W-2s, and taxpayers with significant investment income who did not receive a complete and accurate tax forms from their brokerage within the January-April timeline. Many brokerages will issue interim 1099 consolidated statements and K-1 forms, but then the final version may be very different from the original. There are other situations as well where the original amount reported was incorrect, and you receive a corrected tax form that now requires an amended tax return to get a refund or pay the difference.
Confusion Over Filing Status and/or Dependents
If you used the wrong filing status on your initial tax return, an amendment may be needed. This is the most common with single parents who are missing out on the tax benefits of filing as head of household, and spouses whose divorce did not finalize yet and incorrectly filed as single.
It also happens in reverse when a taxpayer can claim a person as a dependent, but they cannot use that dependent for head of household status. You also may not have realized someone was eligible to be your dependent and have to file an amendment.
Nuts and Bolts of Amending Your Return
You will need to file a 1040X, Amended Tax Return form along with the state equivalent if your state refunds or balances due would be affected by the changes in your federal return.
Once you’ve determined the cause for needing to amend your return, you will need to write a short explanation for amendment on the 1040X and state forms. Then you will also need to identify which line items are being modified and are being modified by how much.
For instance, if you accidentally entered $56,000 of wages as $65,000, you would write “Accidentally transposed number” or “Entered wages incorrectly” or a similar explanation, and that Line 7 of Form 1040 for wages is the line that is being changed. You’d also note the difference of $9,000, as well as the difference between your original and recalculated refund or balance due.
How Long Does an Amended Return Take to Process?
On average, it takes about 12 weeks but can take up to 16 weeks during May-June when the most amended returns get filed. The IRS has a tool to check on the status of your amended return, and it takes about three weeks for yours to show up in the system once it’s been filed. The tool helps determine what stage your amendment is currently at, from received to adjusted to completed.
Depending on the complexity of your tax situation, processing may be delayed if additional information is needed from you and you will be contacted by mail by the taxing authorities.
Dukhon Tax is available to assist with your amended tax return questions and filing – contact us today to learn more about our tax preparation services »