If you want to know what tax breaks you should take, all you have to do is Google, “Most commonly missed tax deductions.” You’ll see advice from TurboTax, Kiplinger and Jackson Hewitt, just to name a few of the top search results. If you don’t want to be beholden to any financial services company, just add “site:.gov” to the end of your query, and you’ll see a bunch of IRS tips. For example, you would type, “amended tax return site:.gov” into your search bar.
But what if you don’t discover this tax break until after you’ve already filed your tax return for the year? Is it too late to get the money back?
Depending on the circumstances, you might be able to file an amended tax return, which can help you get that money back. This article will help you understand:
- What an amended tax return is, and why you would want to file one
- When you can file an amended tax return
- Things to look for to see if you might want to file an amended return
- How you might start the process of filing an amended return
What is an amended tax return? Why would I file one?
An amended tax return is the IRS’ process for allowing taxpayers to correct mistakes from previous tax returns. By filing an IRS Form 1040X (instead of a standard 1040, 1040A, or 1040EZ), a taxpayer can correct mistakes in previous tax returns.
Correcting these mistakes can either result in a refund (great!) or a payment that you owe to the IRS. In case of the latter, you might owe penalties & interest. However, it’s a lot better for you in the long run to take control of the situation before the IRS does.
An amended tax return can be used for several other purposes, such as:
- Making certain elections after the deadline
- Changing amounts previously adjusted by the IRS
- Making a claim for a carryback due to a loss or unused credit
For the purpose of this article, we’ll focus on the most common reason people file amended tax returns: To correct mistakes on previous tax returns and to hopefully get some money back from the government. After all, who DOESN’T like to receive a check from Uncle Sam?
When can I file an amended tax return?
Unfortunately, the IRS does limit your ability to file amended tax returns.
Generally, the IRS allows taxpayers to file an amended tax return for up to three years after the original due date of that year’s tax return. For example, the original due date of a 2015 tax return was April 15, 2016. The deadline for filing an amended 2015 tax return is April 15, 2019.
Some taxpayers file extensions for their tax returns. When they do file, they may end up owing taxes. If that happens to be after the three-year filing deadline, the IRS allows you to file an amended return up to two years after the date the tax is paid.
My personal example: When I was a child, my grandmother had set aside some EE savings bonds for my college education. Since the Navy paid for my college, she gifted them to me, and then I cashed them in. Now, I know a little more about taxes than I did when I first graduated college. I am absolutely positive that the bank overreported my income for that year. As a result, I probably owed more money on that year’s tax return than I should have. However, I can’t go back to amend the tax return, since that was over twenty years ago. That ship has sailed.
How do I know if I should file an amended tax return?
There are no hard and fast rules on figuring out if you should file an amended return. However, here are some questions you might consider:
- Do you have your taxes filed electronically? The number of electronic returns is trending upwards, while paper returns are decreasing. However, paper returns aren’t going away completely. According to the IRS, almost a third of all tax returns filed in 2016 were filed by paper. Ironically, most of the IRS’ most commonly observed tax mistakes can be avoided by filing an electronic tax return. Of course, if you made a math mistake or improperly calculated a credit or deduction, the IRS will probably notify you…IF correcting the mistake results in more money to them. If you accidentally overpaid as a result of the mistake, don’t count on the IRS to call you and give you the difference back.
- Do you have your taxes professionally prepared? I don’t mean by H&R Block. I mean by a tax professional such as a CPA, tax attorney, or an enrolled agent? A tax professional has more education, experience, and training to ensure that your tax return is properly prepared. A tax professional will also ask more questions (usually) to ensure they’ve accounted for all the statements and documents required to support your tax return.
- If you use a tax professional, do you do any tax planning to lower your tax liability? Many people have a CPA or EA prepare their taxes. However, tax season is usually not the right time for a tax professional to catch mistakes that you might have made. And if your professional doesn’t know you on a more personal level, they might assume you don’t need any help.
- Have you accounted for all the major life changes that have happened in the past few years? This includes events like:
- Getting married
- Buying or selling a home
- Changing jobs
This might be harder to answer than you think. After all, everyone knows when a major life event happens. But sometimes, those changes don’t make it into your tax return. And that’s the key.
If you can answer ‘Yes’ to all four of these questions, then great! You’re probably doing all the right things. However, if you can’t answer yes, then how can you be sure you’re not leaving money on the table? If that’s the case, the next question you might ask is, “How do I find out?”
How do I begin an amended tax return?
We would be more than honored to schedule a complimentary consultation. That way, we can see if we might be able to help you file an amended return. We can also take a further look at your finances to see how else we may be able to serve you.
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