Redoing Taxes from Previous Years & How to Refile

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Redoing taxes might sound like a Herculean task. After all, doing taxes in the first place is not considered simple and pleasurable activity by majority of people. But considering the fact that we encounter opportunities to learn new things daily, you might have just realized about potential deductions or credits you never considered in the past. They might be insignificant to even bother, but that will not always be true. In case amending previously filed taxes makes economic sense, below are some things to consider before getting started.

There are few reasons when you might consider making changes to the taxes already filed. Some of them include:

  • You discovered deductions or credits you qualified for but not applied.
  • You forgot to include some items on your tax return that might significantly influence the outcome.
  • You received additional documents affecting taxes after you had already filed the returns.

The form used to redo taxes is 1040X, which is the Amended U.S. Individual Income Tax Return (in Canada use T1-ADJ). Links to the forms can be found on our tax forms page. This form serves to correct taxes filed with forms 1040, 1040A, 1040EZ, 1040NR, and 1040NR-EZ. At this point, you cannot e-file Form 1040X, you have to send it to the appropriate location. For those locations, refer to instructions for Form 1040X that can be obtained on the IRS website.

There is no need to file Form 1040X if you discovered that your calculations were wrong (as long as the data you entered was correct). The IRS will take care of that. Similarly, if you forgot to attach important documents such as W-2 or certain schedules or attachments, Form 1040X is not necessary, as you will receive a letter from the IRS requesting those documents.

There is also time limit to consider for sending the amended returns, and it is generally three years from the time you filed the returns or two years after the tax payment (whichever is later). If you plan to amend more than one tax return, you have to file separate 1040X for every one you want to change.

Making changes to your taxes is not as onerous as filing the original return. You will still need a copy of the return you filed because form 1040X calls for the information you entered and correct amount that should have been reported. The form 1040X is about new information regarding income and deductions, tax liability, payments made, refund or money owed to the IRS, exemptions, and explanation of why you are making the changes.

If you expect the changes to make the refund amount larger, you can still deposit the check the IRS sent you based on the information you provided initially. Any balance will be sent to you separately. On the other hand, if the changes make your tax liability larger, it’s better you pay the difference as soon as you can and avoid higher penalties and interest.

Finally, the changes to your tax return can also affect your state taxes. To adequately prepare yourself for that situation, refer to state links available on the IRS website. They provide access to each state website where you can obtain further guidance how to rectify your returns.