With the tax season underway there is a rush of income tax returns in January most of which expect a refund. But where there is haste there are errors. The IRS allows amending return for the last 3 tax years and while there are instances when it makes a lot of sense to file an amendment, there are instances where you don’t want to do that.
When to file an amended tax return?
The following scenarios warrant mailing an amended tax return:
- You missed a deduction or credit.
- You claimed income or expenses that fall in a different tax year.
- Income reported in a W-2 or 1099 you received was erroneous.
- Incorrectly claimed your filing status.
Make sure to include any new documents with your Form 1040-X to support your new return. And if you discover that you owe the IRS because of those changes, make a payment, if you can, as soon as possible to avoid penalties and interests.
When not to file an amended tax return?
- If you made arithmetical mistake, there is no need to file an amended tax return; the IRS will check the numbers and make appropriate adjustments. There may be instances when calculation errors require your action, but that typically is initiated by the IRS with a letter detailing what to do.
- f you submitted the return electronically and it was rejected; first review the reason for the rejection, make appropriate corrections and e-file again
The IRS doesn’t permit an electronic submission of amended returns; they can only be filed on paper. If you need to restate your taxes for more than one year, file it separately for each year. The IRS even recommends using separate envelops for each one of them.
If you discover that you qualify for additional refund, do not file an amended return until you get the original refund. Only then proceed with the necessary corrections.