A Breakdown On Amending Your Taxes

A Breakdown On Amending Your Taxes

A Breakdown On Amending Your Taxes 1000 667 Deidra Roberts

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:

Understanding Why You’re Amending Them

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.

Look At How Much Time You Have To Contact The IRS

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).

… it can take up to 3 weeks after you’ve mailed in your forms to show up in their system, as well as up to 16 weeks to process.

Know What Forms You Need To Submit

The form for submitting your amended return is Form 1040-X.

The 1040-X lays out changes in four categories:

  • Income and Deductions
  • Tax Liability
  • Payments
  • Refund or Amount You Owe

It then gives you a separate column next to these for marking your changes. 

To save any hassle on going back and forth with the IRS, we recommend you including a statement with our amended tax return describing the changes you are submitting.

Submit Any Owed Payments

If you owe on your amended taxes, it’s smart to just pony up and pay right away. Not only will it make it easier to potentially establish a payment plan, but you could also potentially get the liability out of the way in general. Don’t be alarmed after you’ve sent your payment if you receive a follow-up letter from the IRS assessing interest and penalties to what you’ve already paid. Sometimes amended returns will included an estimated calculation for these amounts, but the IRS will have a more exact calculation due on what you initially underpaid.

We’ll note that if there is a mistake that you amend for…only to find out that you overpaid, the IRS will still send you a return shortly after they reconcile your account.

Be Patient For The Government’s Word

Finally, the amendment process for your taxes can take quite a few weeks. According to the IRS’s tracked called ‘Where’s My Amended Return?’, it can take up to 3 weeks after you’ve mailed in your forms to show up in their system, as well as up to 16 weeks to process. Like we said, getting amended taxes is a serious process and one that really should only be done for big changes. Which, if you’ve been wondering if it’s a worthwhile process for you, don’t hesitate to reach out at the email address below.

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