By Melody Roberson, Associate
April 18th has passed and you’re excited to take a vacation with the hefty tax refund you received…but then you receive another 1099 in the mail that you didn’t include on your tax return. What do you do? Here are some questions you may ask yourself, along with some advice regarding the answer.
Do I need to file an amended tax return?
An amended tax return is not automatically necessary. For example, errors are not a reason to file an amended return – the IRS will correct any math errors you may have made on your return. If, however, you receive a notice in the mail from the IRS letting you know they received a 1099 or W-2 form that you did not include on your tax return, it may be necessary. If this is the case, it is helpful to contact your CPA to help you assess and respond to the letter, potentially avoiding any additional taxes due.
How do I file an amended return?
In order to amend your return, you must submit a Form 1040X, along with any updated forms or schedules that originally contained incorrect information. Form 1040X has three columns: one for the original figures, one to show the corrected numbers, and one to show what changed in between. One of the disadvantages of filing an amended return is that it must be paper filed.
How long do I have to submit an amended return?
If you’re filing to claim a bigger refund, you must file within three years of submitting the original return, or two years from when you paid any tax due from that return, whichever is later. This is also the timeframe for the statute of limitations for the IRS to asses any additional taxes due on the amended return. It is important to pay any additional taxes due as soon as possible in order to avoid interest and penalties accumulated over time. You can find more information on the IRS statute of limitations here.
Will amending my tax return increase my chances of an IRS audit?
The short answer is no, but since the amended return has to be paper filed, it will be handled and reviewed by more agents compared to the original return. If you’re amending your return asking for a considerable amount of money back, the IRS may even more carefully review the situation. However, taxpayers earning less than $200,000 a year have about a one percent chance of being audited.
Given the complexities and tax implications of amending your return, it is recommended you talk to your CPA as soon as you receive a letter from the IRS.
---
The information contained in the Knowledge Center is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. In no event will CST or its partners, employees or agents, be liable to you or anyone else for any decision made or action taken in reliance on the information in this Knowledge Center or for any consequential, special or similar damages, even if advised of the possibility of such damages.