Ever needed to change something you’ve filed on a tax return? If the answer is no, then you’re one of the lucky ones.
Trying to amend your taxes is more than just adding in a few charity contributions you may have forgotten, but a pretty intensive process. In most cases, it’s actually unnecessary, especially if you only pay a simple 1040. Tax amendments are for situations where new or changed information affects the amount of tax you owe or should be refunded to you. Sometimes it won’t matter much, or the IRS will cover minor adjustments, however, it’s good to know how the process works it can you ever need it. That’s why we’ve decided to breakdown the basics below:
Amending your taxes is pretty tedious.
It usually involves amending not just one section of your return, but multiple forms across your entire return.
Often, the IRS will actually amend and correct small items on their own, which if that’s your biggest reason for amending, then no sweat. For example, if you said you made estimated payments of $1,000 towards your taxes during the year you’ve just filed, but then realized you actually made a payment of $1,500 during the year, the IRS software should pick up that discrepancy between what you reported versus what you actually sent, providing you with an adjustment. However, if you’re still wondering if your situation might need to be altered, here are the most common situations to consider:
If You’ve Been The Victim Of A Disaster
A common reason people amend their taxes is that they’ve been a victim of a disaster, such as a hurricane or flooding. Usually involving going back on major assets like homes or vacation properties, this is a significant reason to have your taxes amended.
When New Legislation Is Passed
Another good reason to check back on if it’s worth amending your taxes is if new legislation was passed on the state or federal level that could retroactively help you out. While you might want to check with a tax professional if amending your taxes is right in this situation, as you have to amend the entire return in most instances.
Claims Missed For Deductions And Losses
Although you’re going to want to make sure these are worth the effort if you missed out on a significant claim of deduction or loss, it might be worth going back in for an amendment. We’ll note, however, that this should really only be done if it significantly reduces your tax liability.
You Received A 1099 For Income That You Didn’t Already Include In Your Filed Return
This can happen if you’ve done some moonlighting earlier in the year or had a side-hustle you completely forgot accrued much income. Self-employment income must be reported over $600, which you’ll want to amend yourself before the IRS catches the omission and calculates adjustments. For one, you’ll want to include expenses that could potentially reduce the income earned on the 1099 that the IRS might be unaware of. Second, depending on when the omission was flagged and correct, the IRS may assess underpayment penalties may be included in the amount you owe.
Amending a tax return must be done within three years of the original return, or within two years after you paid any taxes due on that return (whichever is later).