Taxes can be confusing, and errors are bound to happen. If you realize that you made a mistake on your taxes after filing, an amended tax return may right any potential wrongs — helping you avoid potential fees and penalties or even improving the amount of your return in the process.
In this blog, we will explain:
- What an amended tax return is
- When you should file an amended tax return
- How to file an amended tax return
- And how S.H. Block Tax Services can help
Let’s get started!
What Is an Amended Tax Return?
An amended tax return is exactly what it sounds like: a form that taxpayers can complete to correct any errors on a previous year’s tax return. Taxpayers can file an amended tax return to correct errors that could result in a smaller refund or potentially lead to an official IRS investigation like an audit.
Where a taxpayer incorrectly claimed tax benefits, such as credits and deductions, in their original return and they are concerned about an audit, preemptively filing an amended return will reduce or eliminate the 20% accuracy-related penalty an IRS auditor might otherwise assess. However, once you are audited, it is too late to file an amended return.
Where a taxpayer didn’t claim all the benefits they were entitled to in their original return, filing an amended return is a way to request those missed benefits. You generally have to make a claim for a refund within three years of the due date of the original return. If you make a late claim, the IRS may still process the return, but it won’t pay you a refund. It will reduce a balance, though.
Lastly, when the IRS has audited a tax return of a Maryland taxpayer, state law requires the taxpayer file a Section 13-409 report of the audit within 90 days. An amended Maryland return satisfies this requirement.
If you believe you might have made critical errors on a previous return, you should file your amended tax return as soon as possible to avoid any complications.
When Should You File an Amended Tax Return?
When considering whether to file an amended tax return, keep in mind that not all errors need to be amended. For example, the IRS will spot any basic math mistakes you made on your initial return and correct them as part of their standard work. If this occurs, it will adjust your refund or tax liability. In addition, the IRS will notify those taxpayers who forget or fail to provide necessary forms or documentation along with their return and request those items to complete the filing.
However, if you have made any of the following errors, you should file an amended return.
- You incorrectly reported your income for the tax year in question. This may occur when you’re a full-time employee that also does contract work on the side. If you unexpectedly receive a 1099 from one of your clients, you’ll need to update your income information and file an amended tax return.
- For small business owners, you incorrectly tallied your business income or expenses, and wish to correct them.
- Credits or deductions were not claimed or claimed in error. For example, taxpayers who file early but then learn of additional credits or deductions should file an amended tax return.
If any of the above apply to you and your family, please reach out today to schedule a free consultation with one of our knowledgeable tax professionals.
RELATED: Tax Audit Representation
How to File an Amended Tax Return
Thankfully, filing an amended return is fairly simple. Follow the instructions listed on your Form 1040X and make necessary corrections in Column C of the form. On the back of the form, you are required to explain the changes you’ve made and the reason for any updates.
Maryland form 502X is similar to the 1040X, but has its own instructions that should be followed.
You should be absolutely certain that your amended return is accurate before submitting and that you include all necessary documentation. Remember, this can be a lengthy process, which can be made to last even longer if your amended tax return includes additional errors. This process can also be further extended if you have been affected by identity fraud or if your amended return requires IRS bankruptcy clearance.
Long story, short: file your amended tax return accurately and with haste! The best way to expedite this process and ensure a factual account of your finances is to seek out the assistance of a skilled and experienced tax attorney.
File Your Amended Tax Return With S.H. Block Tax Services
The IRS is fully aware that people make mistakes. And, despite their reputation, they’re usually pretty understanding of that fact as long as taxpayers are honest in their assessment and work diligently to correct any previous errors.
Still, sometimes it can be difficult for even the most seasoned taxpayers to determine where or how they might have erred. Even if they are able to root out the source of their mistake, many are confused about how to proceed.
If you feel you might have made a mistake on a previous tax return, one that would either improve your refund or help you avoid potential complications, please contact S.H. Block Tax Services today. Our skilled and experienced tax attorneys have substantial experience helping taxpayers just like you identify previous errors or omissions and assisting them in filing amended tax returns that are accurate and timely.