How to know if you need to amend your taxes
Filing taxes can be tricky, especially if you’re filing without the help of a CPA (Certified Public Accountant) or other professional tax preparer, and you don’t know exactly what you’re doing, it’s easy to make a mistake. Fortunately, if this happens, you can amend your taxes. An amended return is a return filed in order to make corrections to a tax return from a previous year. An amended return is commonly performed to correct errors and claim a more favorable tax filing. For example, one might choose to file an amended return in instances of misreported earnings or tax credits.
Does amending your taxes cost money?
“It doesn’t cost anything to amend your taxes if you do yourself (if, of course amending your taxes doesn’t result in any additional tax amounts due),” said LendingPoint’s Chief Accounting Officer and CPA Christina McGeehen. “You can either print the forms from the IRS website(Form 1040X) and complete yourself manually by following the instructions or you can hire a CPA to do it for you.” Keep in mind that you can file an amended tax return almost immediately after you receive your original return. However, if you are filing to claim an additional refund, you should wait until after you have fully received your original refund before filing Form 1040X.
How do I amend my taxes?
The IRS tells us that there are 4 reasons you’d need to file a 1040X. Those reasons include the following:
- To correct Forms 1040, 1040A, 1040EZ, 1040NR, or 1040NR EZ.
- To make certain elections after the prescribed deadline.
- To change amounts previously adjusted by the IRS.
- To make a claim for a carryback due to a loss or unused credit. “This means that something happened in the current year that allows you to go back and amend your previous year. For example, if you qualify for a credit that resulted in a loss, you could retroactively apply to a previous return under the IRS code,” said Christina. “Or, if the IRS code changes, you may be eligible to take a deduction that you weren’t previously able to take and the IRS allows you to apply the resulting loss to a previous year.”
If this speaks to your tax situation, and you’re willing to DIY your amendment, TurboTax provides a great step-by-step guide tax amendment process:
Step 1: Collect your documents – Gather your original tax return and any documentation that relates to your amendment such as proof of a new deduction you are claiming or a W-2 you didn’t have when preparing the original return.
Step 2: Get the right forms together – Download the necessary forms for the tax year you are amending, for example, if you are amending taxes now, you’d be amending for the year 2017. The IRS maintains a database on its website where you can access all tax forms for previous years, so you’d just need to click and print.
Step 3: Fill out a 1040X– Download a current IRS Form 1040X, Amended U.S. Individual Income Tax Return. TurboTax can help with this. There are written instructions on the form itself, making it easier on those who haven’t has to amend their taxes before and also provides a notes section where you can explain why you’re having to amend.
Step 4: Submit your amended return –Amended returns cannot be filed electronically, so be prepared to mail your amendment to the IRS. If your amendment ends up resulting in paying a higher amount in taxes, attach the additional payment in the envelope to prevent additional interests and penalties.
Do I need a CPA to help amend my taxes?
“Depending upon why you are doing an amendment, a CPA may be your best option as they can redo any calculations on their systems and can more easily complete the comparative forms that are typical of an amended tax return,” said McGeehen. “They can also assist with discussing anything with the IRS on your behalf if needed after the form is filed. Amended returns cannot be filed electronically in either case.”
Additional information on amending taxes
Returns can be amended within 3 years from the original filing date. “You should not amend your return for any math errors or missing forms,” said McGeehen. “The IRS will send a correction notice to correct errors and request missing forms if needed. These correction notices may result in additional tax if income was omitted in error.” Keep in mind that current and former students have many deductions and credits that can be applied to their expenses regarding education. Students who are currently attending school (and meet income and eligibility requirements) can also access the American Opportunity Credit, which can cover up to $2,500 annually for four years, and the Lifetime Learning Credit, which can cover up to $2,000 per tax return.
However, if the problem this year isn’t about amending your taxes but is about not having the available funds to pay, you have two options: take advantage of the IRS’s payment plan, which requires paying interest and penalties, or find a way to finance a lump-sum payment through your credit card or personal loan and skip the penalties. In that case, LendingPoint may be able to help. With a simple online application that only takes a few minutes, LendingPoint could show you funding options that could get you the money you need as soon as the next business day. Checking your options won’t affect your credit score. Apply today.
*LendingPoint is not offering tax advice. If you have any further questions about taxes or tax implications, please consult a tax advisor.