Uh oh. How did that 1099-MISC end up that desk drawer instead of with all your other tax documents you used to file your annual tax return?
That mystery might never be solved, but an X filing can help you get the truth about your taxes to the Internal Revenue Service.
I'm talking about IRS Form 1040X. It's the document you use to correct filing mistakes.
It's known as the amended tax return form and it's really not that puzzling. Basically, Form 1040X lets you tell the IRS what you originally reported, what your revised numbers are and why you are making the changes.
Why amend a return: Most amended returns are submitted once a filer discovers that a mistake cost them some tax dollars.
Commonly corrected mistakes via Form 1040X include —
- An overlooked tax credit or deduction,
- A corrected filing status, for example changing from single to head of household now that you're the year-round caregiver for a dependent, and
- A switch from married-filing-separately to married-filing-jointly to get tax breaks you wouldn’t otherwise get.
And yes, you should file an amended return as soon as you discover a mistake on your original filing (within the set time frame; more on this later), even if it means you end up owing more tax.
Time limit on amending: When folks learn that they left some tax money in Uncle Sam's hands, they obviously want to file an amended return ASAP.
Sometimes, though, the error isn't discovered until later. And if it's too late, you could be out of luck.
In most instances, you must file Form 1040X within three years (including extensions) after the date you filed your original return. If, however, you didn't pay all tax due with our original filing that you want to amend, you only have two years after the date you paid the tax to make changes using 1040X.
The following examples should help you determine the deadline.
Let's say you filed your 1040 on April 15, 2018, and paid your tax bill in full then. Then you discover you could have claimed a tax credit for that year. You have until April 15, 2021, to file an amended return to collect the added tax break.
However, when you filed on April 15, 2018, you paid only $400 of the $500 tax you owed. You paid the final $100 (plus penalties and interest) on Jan. 10, 2019. You have until Jan. 10, 2021, to amend the original filing instead of the usual three years (the April 15, 2021, date in the first example).
You also have some time shifting to consider if the two-years-since-payment date arrives after the standard three-year amended return time limit. In these cases, the IRS says you can amend your return using the deadline that comes later.
In the late-payment example, let's say you finally paid your tax bill on June 10, 2019. That would give you until June 10, 2021, to amend the return, almost two months longer than the original three-year amending option that ends on April 15, 2021.
Similarly, if you paid your taxes late, but not that late (say, in our example, on Aug. 10, 2018), and the three-year grace period from the original filing date provides you more revision time (which it would, since three years to April 15, 2021, is later than two years to Aug. 10, 2020), you can take until the 2021 deadline file your 1040X.
1. File a separate Form 1040X, each sent in a separate envelope,
2. Yes sent in an envelope. An amended return cannot be filed electronically.
3. Be sure to check the year of the return you are amending.
4. Explain on the back of the form the specific changes and reasons for each.
5. Attach any forms or schedules affected by the change.
Amending ASAP: OK, you know how long you can take to file, but just how soon can you amend a return? The short answer is as soon as you discover your mistake.
Theoretically, that means you could file your tax return on April 15 and then send in a 1040X on April 16 to correct an oversight on the original return.
Such a quick correction, however, could cause some confusion, especially if for some reason the X leapfrogs your main 1040.
That's why tax pros and the IRS itself recommend you slow your amending roll if you're filing a 1040X to claim a tax break (and additional refund amount) that you overlooked or that wasn't available when you filed; it happens, like when Congress retroactively approves tax benefits.
Specifically, wait until after you get your original filing's refund amount before filing your 1040X to get the added tax cash.
The good news in this case, though, is that you don't have to wait to cash the first tax refund check or spend the cash that Treasury directly deposited into your bank account.
How to fill out an amended return: Although the 1040X corrects mistakes made on the standard Form 1040 (or forms if you're amending a 2017 or earlier filing; there used to be three 1040s before the IRS made changes following enactment of the Tax Cuts and Jobs Act), the 1040X has a different look.
The key area of focus on an amended return is the form's page 1 three columns. They cover the information you need to supply, specifically:
- Column A for the figures you put on your original return. If you previously amended that return or it was changed by the IRS, enter the adjusted amounts.
- Column C for corrected amounts that prompted you to fill out the amended return form.
- Column B for the difference between Columns A and C. Any negative amounts should be shown in parentheses. The IRS also wants you to explain each change here in Part III of the 1040X.
That's right. Instead of going from column A to B to C, Form 1040X has you go from A to C and then to B.
What can I say other than IRS.
This example, adapted from the Form 1040X instructions, looks at taxpayer Sheila, who originally reported $21,000 as her adjusted gross income on her 2015 Form 1040.
Sheila received another Form W-2 for $500 after she filed her return. To account for that added income, she completes line 1 of Form 1040X as follows:
Sheila also would report any additional federal income tax withheld that's shown on the new W-2 on line 12 in column B of her 1040X.
How to deliver your 1040X: The IRS has been encouraging us for years to file electronically. However, Uncle Sam's tax collector is not yet equipped to handle an e-filed Form 1040X.
Amended returns don’t always go to the same IRS service center that processes regular returns, so double check the form's instructions to ensure you send your 1040X to the proper IRS campus.
Also keep in mind that it takes longer — from eight weeks up to 16 weeks — for the IRS to process an amended return. Once you send in your 1040X, you can use the IRS' online Where's my amended return search tool track its status.
And, yes, that 1040X refund amount will come to you as an old-fashioned paper check. Any refund based on an amended filing cannot deposited directly to your bank account.
When the IRS benefits: If you made a simple addition or subtraction mistake, there’s no need to amend the return. The IRS says its computers will detect the error, notify you and adjust your return automatically.
But if it’s something bigger — say you overlooked a Form 1099 for $15,000 you got from a freelance house-painting job — and you catch and correct it first, it could save you from paying even more to the IRS.
The IRS may not penalize you for this honest mistake, but it sure will collect some interest on the proper amount you didn’t pay on time in the first place. The sooner you correct the error, the less interest you’ll pay.
And I'm sure you won't be surprised to learn that while the IRS can't send you any amended refund electronically, it will gladly accept an e-payment of any added tax you might owe based on your 1040X.
State effects, too: Finally, don't forget about your state taxes.
Since most states that collect income taxes rely on amounts entered on your federal tax return, any 1040X changes could mean you need to amend your state return, too.
Your state tax office will have information on how to correct your state tax return.
You also might find these items of interest:
- 5 amended tax return tips
- Not filing is more costly, thanks to penalties
- NYC attorney pleads guilty to amended tax return fraud