You completed your tax return and submitted it on time. You thought tax time was behind you, but suddenly you realize that you made a mistake on your return. What can you do? Don’t panic: There is a process for amending your return if you discover you made an error or left something out. The Pennsylvania Institute of Certified Public Accountants (PICPA) offers practical advice on when it’s best to amend a return and what’s involved.
When Should I Amend?
You should amend your return if you need to make changes to your reported income, filing status, deductions, or credits. Let’s say you did some part-time work on the weekends last summer and forgot to include that income on your 2016 return. Or maybe you just realized that you’re eligible for the American Opportunity tax credit based on college courses you took last year. These are some examples of reasons for why you may need to send in an amended return.
The IRS will match up W-2 forms and 1099 forms, and send notices to taxpayers when one of these forms is missing. It is up to you, however, to proactively amend returns when items such as K-1s or rental property activities were omitted, as the IRS doesn’t typically send these items. You should also know that just because the IRS sends you a notice that a 1099 form was omitted, that does not mean there aren’t other items that are worthy of an amended return.
How Does the Process Work?
You can generally amend a return up to three years from the date the original return was filed (or up to two years after the tax was paid, whichever is later). If you were due a refund from your original return and realize you deserve an additional refund, wait until you get the original refund before you file your amended return. Amended returns take up to 16 weeks to process. If you owe more tax, file your amended return and pay the tax as soon as you can to avoid possible interest or penalties charged for late payment. And don’t forget to amend your state tax returns if the same changes apply to them. Consult your tax adviser regarding whether the state or local returns need to be amended, as states and localities may have different tax guidelines than the IRS.
When Isn’t It Necessary?
Not all mistakes require an amended return. If you made a math error, the IRS will automatically correct those errors for you. If you failed to attach necessary tax forms, the IRS will generally mail you a request for them.
Will the IRS Call Me about a Problem?
There are many criminals who try to scam people by pretending to represent the IRS and demanding money. The IRS does not initiate contact with taxpayers by e-mail, text, or social media to ask for personal or financial information. Don’t click on attachments or links in e-mails claiming to be from the IRS or provide confidential information on websites associated with them. In addition, the IRS usually initiates contact with taxpayers by mail, not by phone, and it would never call to threaten things such as arrest, deportation, or license revocation when attempting to collect taxes. Call the IRS at (800) 829-1040 or contact your local CPA if you have any questions about an IRS communication that you receive.
A Special Option for Some Veterans
A new law offers veterans with combat-related injuries the chance to file amended returns to reclaim taxes that were improperly withheld. Veterans who leave the armed services with personal injuries or sickness resulting from active service in the armed forces receive severance payments that are not supposed to be included in their gross taxable income, but taxes on some payments may have been incorrectly withheld in the past. Thanks to the Combat-Injured Veterans Tax Fairness Act of 2016, veterans can file amended returns for the improper withholding going back to 1991. Affected veterans will be notified of their eligibility by Dec. 20, 2017, and will have one year after notification to file an amended return.
Contact Your Local CPA
If you believe you need to amend your return, or if you have questions about any tax-related issues, turn to your local CPA for help. He or she can offer personalized advice on all your financial concerns. To find a CPA in your area or for more financial tips, visit www.picpa.org/moneyandlife