How to Prepare an Amended Return
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HOW TO PREPARE AN AMENDED RETURN NOTE: TaxSlayer’s amendment feature is not great. Make sure what you end up filing is correct. I have often just done the return by hand after processing it through TaxSlayer and finding errors. Usually, the return “as amended” is correct, but the 1040-X makes random changes for no reason. In sum, you have to prepare a Form 1040-X, attach an “as amended” tax return to it and mail it to the appropriate address. See the attached article for a fantastic, straightforward and often humorous “how-to” article! If you also have to file an amended state return, go to the appropriate state website to find the form and instructions. On the Main Menu page, in the top right-hand corner, pick the year of the return you need to amend. Then do a search for the return you need to amend. Once in the return, click on “2017 Amended Return,” using the appropriate year, in the bottom left- hand corner: You will see this screen: The “How to Amend Your Return” tab will display the following: Form 1040X Instructions – How to File an Amended Tax Return By Gary Tuttle Views 50.5K Share this Article There are plenty of common tax-filing errors to avoid. When you discover an error, alarm bells should go off. Will the IRS send someone to arrest you for preparing a false return? Never fear: Form 1040X is designed for just such a circumstance. And lest you think you are the only person who made that mistake, relax. According to the IRS, you’re in good company. They are expecting almost six million (5,729,672) amended tax returns to be filed. Since they are expecting in the neighborhood of 152,688,737 individual returns to be filed, the amendments amount to almost 4%. See, you are not alone! Here’s everything you need to know about filing a Form 1040X. For help with other issues, check out our complete Tax Guide. Form 1040X Basics Form 1040X is labeled “Amended U.S. Individual Income Tax Return.” It is a two-page form. Its purpose is to amend an individual tax return (1040, 1040A, or 1040EZ, typically) that was previously filed. You can make corrections to these submitted returns, or change amounts on the returns that the IRS may have adjusted after submission. The possible outcomes of amending are that you may get an additional refund, have to repay part of the refund that you already received, or pay additional tax. Note that Form 1040X cannot be e-filed. It has to be mailed with supporting return, schedules, forms, and source documents (like a W-2, for example). In order to prepare an amended return, you need a copy of your original return, any new source documents or other information that will change (such as filing status or dependents), and your Form 1040X. When to File The IRS advises that if you are due a refund on your original return, wait until you receive the refund before submitting an amended return. That way, you know that the IRS has finished processing your return, and the amendment will be processed after the original return. Generally speaking, you have three years from the date you filed your original return to file a 1040X to claim a refund. You can file the 1040X within two years from the date you paid the tax, if that date is later. Review the 1040X Instructions for special rules that apply to certain claims. How to File Page one of Form 1040X has a header section with information similar to the regular 1040. The first thing you need to do is check the box indicating which tax year you are amending. If you need to amend more than one year’s return, do a separate 1040X for each year. Then, you enter your name and social security number (and the same data for your spouse, if filing jointly). Enter your current address and daytime phone number. Then enter your filing status, whether you are changing it or not. Also, check the box to indicate if your all members of your household had minimal essential health coverage. Next, you come to the section where most of the changes usually occur. The left-most column has descriptions and instructions under the following general headings: Income and Deductions Tax Liability Payments Refund or Amount You Owe The right three columns are for numbers: Column A: Original Amount Column B: Net Change Column C: Correct Amount Start by putting the amounts from your original return in Column A. Then, put the increase or (decrease) in Column B. Next, combine the amounts in Columns A and B, and put the result in Column C. If there is no amount in Column B, then the figure from Column A is repeated in Column C. Show negative numbers in parentheses, for example, -234 would be (234). So, the header might look something like this: Example Form 1040X Income and Deductions As an example, let’s assume the original 2016 return of a single taxpayer with no dependents showed Adjusted Gross Income (line 37 of Form 1040) of $23,000, and his newly discovered W- 2 shows $1,500 in Box 1. In the “Income and Deductions” section of Form 1040X on Line 1, he would put $23,000 in Column A and $1,500 in Column B. The amount in Column C would be $23,000 + $1,500 = $24,500. Suppose that the original return had withholding of $2,100 shown on Form 1040, line 64, and that the new W-2 shows withholding of $300 in Box 2. Then on Form 1040X, line 12, in the “Payments” section, he would put $2,100 in Column A and $300 in Column B. Column C would show $2,100 + $300 = $2,400. That’s not the end of the story because our taxpayer would have a standard deduction of $6,300 and a personal exemption of $4,050. These amounts go in the “Income and Deductions” section, on lines 2 and 4, respectively, in both Columns A and C. These are IRS numbers for the taxpayer’s filing status and personal exemption and do not change, so nothing goes in Column B. Now, we need to follow the instructions on line 3, subtract the amounts on line 2 from the amounts on line 1 in each column, and put the results on line 3 in each column. This action reduces adjusted gross income by the amount of the standard deduction. Then, we do something similar with the personal exemption. We follow the directions on line 5 and subtract line 4 from line 3 in each column, and put the results on line 5. This gives us taxable income as found on the original return and as amended, the difference being the $1,500 from the new W-2. Tax Liability Having arrived at the original and amended taxable income amounts, we now enter the tax on line 6 in the “Tax Liability” section. We enter the tax of $1,438 on the original return into Column A. We go to the 2016 Tax Table in the 1040 Instructions and turn to page 80. In the section labeled “14,000,” we find the tax bracket $14,150 to $14,200. In the column labeled “Single” (our taxpayer’s filing status), we find the tax amount of $1,663, which we put on line 6, Column C, on the 1040X. The difference between those two numbers – $1,438 and $1,663 – is $225, which goes in Column B. Since, in this case, we have no credits for line 7, our number for line 6 are repeated on line 8. Similarly, we have no other taxes, so our numbers are again repeated on line 11: in columns A, B, C, we have $1438, $225, $1663, respectively. This section of the 1040X looks like this: Payments We are done with the Tax Liability section, and we can move on to the “Payments” section, where we previously saw that we would put the withholding on the original return, and the new withholding on the new W-2, which we totaled on line 12, Column C. Because our taxpayer is under 25, he was not eligible for the Earned Income Tax Credit. No dependents results in no Child Tax Credit and not being a student means no education credit. He also made no estimated tax payments, so lines 13, 14, 15 are blank, as is line 16, since he did not file for an extension. So, on line 17, we add lines 12-15 in Column C and line 16. Our total is $2,400. Refund or Amount You Owe In the “Refund or Amount You Owe” section of the 1040X, we finally find out if we have to repay part of the refund that we already received. Or, perhaps, we’ll get an additional refund. On line 18, we enter the refund amount we previously received, $662 in this case. That amount is the difference between Column A, lines 12 and 11. We subtract that amount from the new withholding amount (line 12C) and enter the result ($1,738) on line 19. Do you feel the tension rising as we get near the moment of truth? Now, we compare that amount to the amount on line 11C (amended tax liability). Since the liability ($1,663) is less than the figure on line 19 ($1,738), we subtract and put the “additional amount overpaid” ($75) on line 21, then enter the amount again on line 22.