What Is an Amended Tax Return?

Episode 40:   Have you ever filed your tax return and then realized something doesn’t look right on the return?  You have the right to file an amended tax return to correct mistakes and/or oversights.  Timalyn will explain what this is and why you should file it.

IRS Form 1040-X

The IRS Form 1040-X Amended Individual Tax Return is the form you’ll use to correct your original return.  There are other types of amended returns. Form 1065-X  is used for Partnerships, Form 1120-X  and 1120S-X  are used for Corporation and S-Corporation amendments.  For today’s episode, Timalyn will focus on the 1040-X.

What Is a Continuous Use Form?

The IRS Form 1040-X is considered a continuous use form.  This means the IRS isn’t updating this form each year.  If your return is for 2020 or later, you’ll use the same form. 

You Found a Mistake, So Now What?

It’s possible that by filing the 1040-X, you could be able to reduce your tax liability based on the new (amended) information.  Even if it doesn’t reduce your liability, it may still reduce the penalties and interest.

Timalyn uses the example of how business owners may have overlooked the Sick and Family leave credit during the COVID years.  There are 2 resources you may want to review to see if you are eligible for the credits:

• Sick and Family Leave Credits for Self-Employed Taxpayers
•  Is there a Tax Credit for Self-Employed Workers Affected by the Coronavirus?

The 1040-X is used to correct a 1040, 1040-SR (for seniors) or 1040-NR (for non-residents).  It can be used to make adjustments for credits or deductions originally missed, it can be used to claim a carry-back due to a loss or unused credit.  The 1040-X can also be used to make certain elections, after the prescribed deadline.

The 1040-X shows your original information and then shows how the additiona information changes the originally submitted return.

You can use the form to correct a genuine mistake.  If the IRS doesn’t correct a math mistake, you could use the 1040-X to make the correction.  If you are worried about being assessed with an accuracy-related penalty, listen to Episode 28. 

In Episode 25, Timalyn discussed Tax Basics 101.  A credit against tax owed may need to be entered, because if the IRS corrects a math error, it may not address other issues related to that new information.  Timalyn provides an example of this from a recent client’s situation. 

Don’t Procrastinate

Timalyn explains that you must move in a timely manner when you realize there’s an error on your return.  IRS form 1040-X must be filed within 3 years of the date you filed your original return, if you are now claiming a credit or refund, or within 2 years of the date you paid the tax, whichever is later.  Note, the 3-year window does include extensions. 

While this episode primarily deals with mistakes on your federal tax return, you may also need to review your state and local tax returns. The current 1040-X be e-filed. The 1040-X for 2019 and prior tax years cannot be e-filed.  Timalyn uses the example of someone who either did or didn’t claim their child, this may need to be amended, once the error is identified. 

Injured Spouse Relief

This was covered in Episode 15.  You can use it to protect your share of a refund if your spouse owes back taxes, child support, or any other government entity entity. Timalyn also wrote an article about it.  Make sure you include an updated injured spouse form with the 1040-X if a credit or refund is due.  For more information on the form watch Timalyn’s video .

Don’t Intentionally Manipulate Your Income to Get a Mortgage

If you’re trying to get a mortgage and you intentionally file fraudulent information or try to manipulate the tax return so you qualify, you may be committing mortgage fraud.  The 1040-X shouldn’t be used, after you’ve qualified using false information.  If you need to generate additional income to qualify for a loan, focus on doing that and avoid the legal liability.

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Please also consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn’t ruin their life either. 

As we conclude Episode 40, we encourage you to connect with Timalyn on social media. You’ll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.  

Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode.

For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.

 

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.