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Form 1040-X now can be e-filed, but just (for now) to correct 2019 return mistakes

Tax return mistake oops

We all should learn from our mistakes. That's especially true of tax mistakes.

And now that learning — and correcting — process is getting easier.

The Internal Revenue Service now will accept some electronically filed amended returns.

There's just one hitch.

This long-awaited electronic filing process, which the IRS promised earlier this summer, is available for making corrections only to tax year 2019 Form 1040 and Form 1040-SR returns. Those were the ones you filed (or got an extension file) this year by July 15.

If you have an earlier filing you need to fix, you'll still have to use the paper Form 1040-X.

Baby e-steps: Still, even though the amended e-filing start is narrow, everything has to start somewhere.

This is a good first step, especially during a difficult time. I credit the IRS for getting this done as the agency also is dealing with coronavirus pandemic tax hurdles and handing out COVID-19 economic relief payments.

And the IRS says additional improvements to the newly electronic 1040-X are planned.

Making the 1040-X an electronically filed form has been a goal for the tax software and tax professional industry for years, as it was one of the last major individual tax forms that needed to be paper filed.

It's also been a regular recommendation from the IRS Advisory Council (IRSAC) and Electronic Tax Administration Advisory Committee (ETAAC).

Isn't it tax ironic? The reason for making 1040-X filing electronic is obvious.

Taxpayers, and tax professionals, too, have embraced tax preparation and filing software. This COVID-crazy filing season, for example, e-filing through July 24 was up almost 10 percent over the same period last year.

Sure, that 2020 filing season mid-year total includes those e-filed returns submitted by those just so they could get COVID-19 economic relief payments, but still almost 144 million folks turned to their computers to send the IRS info.

And each year, says the IRS, about 3 million taxpayers file 1040-X forms.

True, comparatively speaking, that's not a lot of amended returns. But if you ever had to do this, you know it was a pain.

In past tax years when all of us e-filers had to fix a tax return mistake, we couldn't simply import the information we needed to correct from that digital document. We had to manually enter it on a paper form.

And as the IRS has told us for years, that pen to paper method is more prone to errors.

The irony of making more mistakes while trying to fix previous ones has not been lost on the IRS, the tax software industry and taxpayers. Heck, even Alanis Morrisette would have noticed — like rain on Tax Day, perhaps? — except she's a Canadian  who probably has her own issues with that country's revenue agency.

Sunita Lough, IRS Deputy Commissioner for Services and Enforcement, acknowledged how this would make things easier for all in the announcement of the new 1040-X e-filing option.

"The addition helps taxpayers have a quicker, easier way to file amended returns, and it streamlines work for the IRS and the entire tax community," said Lough.

Awaiting industry updates, too: Speaking of those tax software programs that are so popular, while the IRS says it's ready to accept e-filed 1040-X forms, we still have to wait a bit if we want to amend any errors on our most-recent returns.

We can't electronically fix it until the tax software you used to original e-file it updates it software.

It shouldn't be long though. The major tax preparation software companies that already deal with the IRS on other e-filings already are working on adding the electronic 1040-X to their inventories.

What if you use one of the companies that participate in the IRS-Free File Alliance for your annual electronic tax prep and filing needs?

I've put in a call to the IRS as to whether the new electronic Form 1040-X will be accessible via Free File or the associated free fillable forms for folks who make more than the annual adjusted gross income threshold. I'll let you know as an update here when I hear back.

UPDATE, Aug. 19, 2020: OK, it looks like a Free File 1040-X option could be one of those promised improvements. An IRS spokesman told me, "The 1040-X is not currently a Free File option, but it is under discussion." 

Q&A for amending: Whichever tax software you use — and maybe, hopefully, Free File versions, too — eventually electronically filing Form 1040-X will be the same.

The tax-filing software uses a question-and-answer format for us to input our tax data. That will be the same process for amending an erroneous original filing.

Plus, once we hit send, the corrected tax return goes straight to the IRS. No waiting on or worrying about mailed delivery of your corrections, especially when the 1040-X means you'll owe Uncle Sam less or get money back.

"Adding the 1040-X to the e-filing portfolio provides a better experience for the taxpayer, all around. It makes submitting an amended return easier and it allows our employees to process it in a more efficient way," said Ken Corbin, the IRS Wage and Investment commissioner and head of the division responsible for processing these returns.

A look at the 1040-X: Typically, users of tax software don't see the IRS forms as they electronically complete them.

But since Form 1040-X is this week's featured Tax Form Tuesday document, let's take a look at the form we soon will be sending digitally.

As you can see from the excerpt below, you must enter the original amounts, the amount that your mistake discovery will change than number and then the corrected amount.

Form 1040-X_excerpt
This is a snippet. Click here to see the full IRS Form 1040-X as a PDF.

Again, the software Q&A will make this easier, pulling in that old data and then you just having to enter the amended info.

Some amended filing X-tras: Also, whenever you file a 1040-X, either the old-fashioned paper way or electronically, check out these 5 amended tax return filing tips. They look at timing (you generally must do so in three years after the date you filed your original return), as well as the common mistakes that lead to 1040-X filings.

Finally, there's one other change to the amended tax return form that has no practical effect on us filers. However, I know tax geeks have already noticed the update made earlier this year to the form.

Instead of being Form 1040X, it now has a hyphen in the title. The Mulder and Scully fan in me appreciates this punctuation mark change.


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