Section 64 of Income Tax Act
April 26, 2018
AUM – Assets under Management
April 26, 2018

US Tax Returns – Should I File an Amended Return

Last Update Date : April 26, 2018

filing amended US tax return

When we first start learning to write, we learn to write with pencils. The reason for the use of pencils is simple, during the learning process, mistakes are bound to happen and mistakes made with pencils can be easily erased, unlike starting to learn to write with pens, which makes corrections difficult. Similarly, despite our efforts to file our tax returns with accuracy, we sometimes make mistakes and the opportunity to correct our mistakes should be available. So, as we use erasers to fix our mistakes when writing, we can amend filed tax returns during the past three years. Read this guide to know more about filing amended US tax returns.

When To File An Amended Tax Return

To claim a refund, taxpayer must file Form 1040X within 3 years after the date he/she files his/her original return or within 2 years after the date taxes are paid, whichever is later.

The reasons an individual may want to file an amended return can vary:

  • Missed forms – Sometimes it may be that a certain form, such as K1 or W2 was missed.
  • New laws – the opportunity may arise that an amendment can be filed for issuance of a refund, as per the new laws.

For example: When same sex marriages were made legal, couples were able to take advantage of the new law and amend their previous years returns.

However, in cases of simple math errors or forgotten attachments, the IRS in most cases will correct the errors and request the forgotten attachments.  Therefore, in such situations a taxpayer does not need to file an amended return.

How to File Amended Tax Return

Unlike, when filing the original return, amended returns are filed, using Form 1040X (shown below) and it must be done manually instead of online submission.

form 1040x
To fill out form 1040X simply:

  • Fill out the details from original return
  • Mention the changes required
  • Explain reason for amendment
  • Attach supporting documents
  • Add payment for any taxes owing (to minimize interest penalties)

Note: if extra refund amount is owed, it is advisable to file the amended return after receiving the refund from the original return, as the IRS will send the second amount separately.

Advantages and Disadvantages of Filing an Amended Return

Advantages

  1. If a taxpayer feels they have paid less taxes than the amount owing, then it is best to file as quickly as possible to minimize the penalties/interest charges that may have accumulated. It is also within the taxpayers’ interest to be proactive and file his/her amended return before receiving a notice from the IRS, which might result in severe action/heavy penalties being issued.
  2. If it is refund case, then filing an amended tax return makes sense. However, see if it is worthwhile, as if it is a small amount, it may not be worth the time and effort to fill out the forms and file the new return.

Disadvantages

  1. If a considerable amount in refund is found owing, the IRS may choose to do a full audit. The IRS may choose to look at everything, instead of just reviewing the new changes made to the return. So, it may result in other unknown surprises, which can cost the taxpayer, as it is not a matter of choosing to correct only those sections which will result in money being returned.
  2. If a taxpayer owes more taxes, then he/she may be subject to pay the interest and penalties for the period from when the original return was filed and the newly submitted amended return.
  3. Filing must be within the allotted time of three years from when the original return was filed if there is a refund in the amended tax return.
  4. Amended returns must be filed manually, as there is no online submission option available.

Processing Time

When filing tax returns, during tax season the IRS processes refunds within 21 working days. However, with amended returns a taxpayer can expect the turnaround time to be anywhere between 8-12 weeks and in some cases, up to 16 weeks. The application status can be tracked here.

Before, taking out your eraser to correct your mistake, ensure if it is indeed a mistake worth correcting. Enlist the aid of the tax experts at H&R Block India for the filing of your India and US Tax Returns in a speedy and efficient manner.

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