Every year I must amend several clients’ returns that were previously filed for various reasons. This year as the Oct. 16 extension deadline for individual tax filing approaches, I am faced with a new dilemma. I have about 10 returns that are essentially complete but are missing some key documents because the issuer of those documents has not issued them by their Sept. 15 deadline for that respective filing. We have decided it is better to file with the information we have already received and then later file an amended tax return once that additional information is received. This helps reduce any late filing or late payment penalties that may incur.
There is a formal process that the IRS and other taxing authorities have in place to allow you to report changes to a previously filed tax return. Amending a return effectively changes what you originally reported to what you would like to, or should, report. Generally speaking, it is far better to amend your own return than to wait until you receive a notice from the IRS informing you of a mistake that was made.
You can amend a return for up to three years from the initial filing deadline. In other words, presently you can amend 2020, 2021 and 2022 tax filings as those years are still considered open by the taxing authorities. You will need to use Form 1040X, Amended U.S. Individual Income Tax Return, to file an amended return. You will use this Form 1040X to amend Form 1040. So, regardless of what form that you originally filed you will need to use this Form 1040X. If the changes involve another schedule or form, you must also attach that schedule or form to the amended return.
If you are amending more than one return, prepare a 1040X for each return and mail them in separate envelopes to the appropriate IRS location. The 1040X instructions list the address to mail the amended return, and this mailing address varies based on your location. You now can also amend federal and Ohio returns electronically. Furthermore, be sure that you enter the year of the return that you are amending at the top of the Form 1040X as indicated.
Please be sure to include a detailed explanation of the reason for the amended return in the space provided on page 2 of the 1040X Form. If you are filing to claim an additional refund, it is advisable that you wait until you receive your original refund before filing Form 1040X. You may cash that original refund check while waiting for the amended return to be processed if it entitles you to an additional refund.
If you owe additional taxes as a result of the need to amend the return, pay the taxes as soon as possible. The IRS charges late payment penalties and interest if there is a balance due and the amended return is being filed after the original filing deadline. Paying the taxes due that are associated with the amended return as soon as possible will help to reduce the amount of penalties and interest charged to the account.
Your state tax liability may be impacted by amending your federal return, and it may be necessary for you to amend your state or local returns as well. In Ohio, if your adjusted gross income from page 1 of your federal 1040 return, or the number of exemptions you claim is changed, then you will need to file an amended Ohio return as well.
So, if you have discovered that you have an error on a previously filed return or additional corrected information is received after the original tax filing, be proactive and amend the affected returns. It is a far easier process for you to initiate a change to a previously filed return than to have to follow up and respond to IRS notices when they determine that a reporting mistake of some type has occurred.
Paul Pahoresky is the owner of PRP & Associates. He can be reached at 440-974-1040 extension 214 or at paul@prpassoc.com. Consult your tax advisor for your specific situation for additional information and guidance on these topics.
