Procedures to file an amended tax return to the IRS

If you made an error on a tax return you already filed, or just found new information, such as a deduction or tax credit you just realized you qualify for, file an amended tax return to make the correction. The Internal Revenue Service (IRS) is aware that the tax code is complex and that people make errors. The procedure for submitting an amendment is simple. Just file a Form 1040X, Amended Tax Return, along with any corrected or additional documents you did not originally file with your return.

Step 1: Gather your documents

Get your original return and all new documents together. You will need to reference your original tax return and all documentation related to the amendment, for example, proof of a new deduction you are claiming or a Form W-2 that you did not have when you prepared the original return. If you are missing a Form W-2, you can file a Form 4852s and ask the IRS to send you a replacement Form W-2, as long as your employer has provided this information to the IRS.

Step 2: Gather the correct forms

Download the relevant forms for the tax year you are amending. The IRS maintains a database on its website, where you can access all the tax forms for previous years. Alternatively, you can also file your amendment, and we will automatically search for and complete the forms you need.

Do not forget that you don’t need to submit new forms for your entire tax return, but only for the affected sections. For instance, if you originally prepared a schedule B to report interest income, the fact that you amend your return to claim a charitable contribution deduction (not reported on Schedule B) will not have an effect on it. However, you will need to prepare a new Schedule A to report the charitable contribution along with your listed deductions.

Step 3: Complete a Form 1040X

Download an up to date IRS Form 1040X, Amended Federal Income Tax Return in the United States. The form includes simple following instructions and only needs you to add new or updated information. You do not need to copy information from your original statement. Additionally, you will find a space where you can write an explanation of why you are amending your statement.

Step 4: File your amended return

File the amended return to the IRS. Before mailing your amended return to the IRS, ensure that you have attached all essential forms and supporting documents. In the event that your amendment results in a tax bill for a huge amount, you must include the payment of additional taxes with the return. By making the payment, you can minimize the amount of interest and penalties that can be applied to you since, from a technical point of view, you are making a late payment of the tax. The IRS uses eight to twelve weeks to process your amendment, so allow time before contacting them for your amended return. In most instances, if you expect to receive a refund, you have three years from the original filing deadline to claim it by filing an amended tax return.

Reasons to file an extension on your federal taxes

Traditionally, federal tax returns are due on April 15 or the next business day. However, the IRS (Internal Revenue Service) each year grants you an automatic extension to file your taxes, as long as you complete Form 4868. The 2020 tax return expires on July 15. Familiar reasons for requesting an extension include lack of organization, unforeseen events, or for tax planning purposes. But bear in mind that even if you get an extension for filing your return, your 2020 income taxes must still be on or before the July deadline.

Unforeseen life events

Even if you intend to file your tax return by the July deadline,  sometimes life events interfere with the ability to file it on time. If you have a death or illness in your family or are a victim of a natural disaster, you probably won’t be able to present things on time. Although the IRS does not need an explanation when you request an extension, there is no reason to prepare your tax return in a hurry if other problems have distracted you and require your attention.

Incomplete tax documentation

Since the federal government will assure you of an extra time extension just by asking, you can take advantage of this extra time to make sure your statement is accurate. For example, if you have misplaced the W-2 form your employer sent you and are waiting for a duplicate to arrive, it is best to submit the extension while you wait for that form. If you just estimate your income, you may still have to make corrections in the future.

IRA conversions

Sometimes spending a little more time to file your tax return can be a tactical choice to help you get more tax savings. For instance, up to tax year 2018, if you change your traditional IRA (personal retirement account) to a Roth IRA you must pay taxes on the total account balance at the time of conversion. However, the IRS allows you to “re-characterize” your Roth IRA back to a traditional IRA at any time before you file your tax return, allowing you to prevent paying balance taxes. Since this conversion can take some time, requesting an extension for filing can remove the obligation to pay the tax.

Penalties for late payments

Regardless of when you submit your tax return, if you don’t pay the tax you owe before the deadline, IRS fines can be harsh. The IRS will charge you .05% for each month you spend on the amount you owe after the deadline to file your tax return.

If you do not submit your return by the extension date, the IRS penalty increases to 5% for each month, up to a maximum fine of 25% of your amount to pay. A simple way to avoid the penalty is to pay taxes with your credit card on or before the deadline. When you do, this payments method serves as an extension request and you won’t have to submit Form 4868.