Monday, May 12, 2014

How to Amend Your Federal Tax Return

Here are some additional thoughts, based on reader questions and interviews with tax pros, on what to do when you discover mistakes—or even honest omissions—on a tax return you've filed. The answer varies depending on your situation and the size of the change.

Suppose you get a revised form from a brokerage house or some other financial institution changing the amount of dividend income reported for last year. Often, the change is just a few dollars. In such cases, tax pros say many clients routinely ignore it, even if the change would mean a slightly larger refund. It may not be worth the cost of paying your tax preparer to file amended returns.

But the answer would be different if you receive a notification involving a substantial amount. "You usually should file an amended tax return if you made an error claiming your filing status, income, deductions or credits on your original return," the IRS said in a "tax tip" in April. Use Form 1040X, and check on your state's rules, too. (Most states have their own income tax.)

When should you file an amended return? This can be tricky. "If you are due a refund from your original return, wait to receive that refund before filing Form 1040X to claim an additional refund," the IRS said. "Amended returns take up to 12 weeks to process." You may cash your original refund while awaiting the additional refund.

If you owe more tax because of something you just discovered, "file your Form 1040X and pay the tax as soon as possible," the IRS said. "This will reduce any interest and penalties."
How do you find out what's happening on your amended return? You can check three weeks after you file by clicking on "Where's My Amended Return?" on the IRS website ( You can also call 866-464-2050. The IRS says you can use this to track an amended return for the current year and up to three years back.