What is an Amended Return?

An amended return is a form filed in order to make corrections to a tax return from a previous year. An amended return can be used to correct errors and claim a more advantageous tax status—such as a refund. For example, one might choose to file an amended return in instances of misreported earnings or tax credits. Mathematical errors, however, would not require amendments, as the IRS would automatically correct for such errors.

Key Takeaways

  • An amended return is a form filed in order to make corrections to a tax return from a previous year.
  • Form 1040X, available on the IRS website, is used for filing amended returns. 
  • Change in filing status, change in the number of claimed dependents, incorrectly claimed tax credits and deductions, incorrectly reported income, are reasons individual taxpayers file an amended return. 
  • The drawback of filing an amended return is that the document has to be mailed to the IRS Service Center that processed the original tax form and can take up to 16 weeks to be processed.
  • There is a three-year statute of limitations on issuing tax refund checks.

How an Amended Return Works

All taxpayers are required to file their taxes annually for the previous tax year. Taxpayers may realize that they made a mistake in filling out their tax forms or that their circumstances have changed after they have submitted or mailed a return that has been accepted by the government. If this occurs, the Internal Revenue Service (IRS) has provided a way for these individuals to re-do their taxes by providing an amended return form, Form 1040X, on the IRS website.

An amended tax return can be filed even after the tax filing deadline for the tax year has passed.

Not all errors need to be amended using the form. A math error, for example, will be spotted and corrected by the IRS on its end. When this happens, any refund owed will be adjusted and any extra tax liability due will be billed to the taxpayer. In the event that the individual fails to include a required form or schedule in his or her submitted original tax return, the IRS will send a letter requesting that the missing information be mailed to one of their offices.

When to File an Amended Return

An amended return needs to be filed by a taxpayer if:

  • The taxpayer’s filing status for the tax year changed or was incorrectly entered. For example, if an individual filed as single but actually got married on the last day of the tax year, he will need to amend his return by filing his taxes under the appropriate status— married filing jointly or married filing separately.
  • The number of dependents claimed is inaccurate. An amended return will be needed if a taxpayer needs to claim additional dependents or remove dependents that were previously claimed.
  • Tax credits and deductions were claimed incorrectly or were not claimed. In the latter case, the taxpayer may have realized that he qualified for a credit or deduction and may want to file an amended return to reflect this.
  • The income reported for the tax year was incorrect. If a taxpayer receives additional tax documents for the tax year, say a Form 1099 or a K-1 arrives in the mail after the tax deadline, she may file an amended tax return to report the additional income.
  • The taxpayer realizes that he owes more taxes than he actually paid. To avoid getting hit with a penalty from the government, he can file an amended return with the IRS.

How to File an Amended Tax Return

Form 1040X has three columns: A, B, and C. Under column A, the figure that was reported in the original or last-amended tax form is recorded. The taxpayer will need to input the adjusted or correct number in column C. The difference between columns A and C is reflected in column B. The adjustments made to a tax return will either result in a tax refund, balance due, or no tax change. The taxpayer also has to explain what changes s/he is making and the reasons for making each change in a section provided on the back of form 1040X.

Pros
  • You can correct errors and avoid a penalty for not reporting income and underpaying taxes.

  • You can claim the refund you were owed but didn’t file to get.


  • You can correct for circumstances that changed since you originally filed.


Cons
  • Form 1040X cannot be filed electronically.


  • Processing an amended return can take 16 weeks or longer.


  • There is a three-year statute of limitations on getting tax refunds.


Disadvantages of an Amended Tax Return

The drawback of filing an amended tax return is that Form 1040X cannot be submitted electronically, although the IRS has announced they will start accepting e-filed amended returns in summer 2020. After filling out the form, the taxpayer has to mail the document on paper to the IRS Service Center that processed the original tax form. The IRS manually processes amended returns, and the process can take 16 weeks —or even longer, if the amended return is not signed, is incomplete, has errors, requires additional information, needs clearance by the IRS bankruptcy area or has been routed to another specialized area, or has been affected by identity fraud.

There is, however, a three-year statute of limitations on issuing tax refund checks. Therefore, any filed amended returns that will result in a tax refund needs to be done within three years after the date the taxpayer filed the original tax return. Any refunds received after the stipulated three-year mark will only cover overpaid taxes made during the previous two years. An amended return filed to account for additional income or overstated deductions does not fall under any such statute and can be filed at any time.