How to Amend Your Income Tax Return

It happens all the time: You file your taxes only to later receive an important document listing a transaction that should have been included on the return. Or perhaps you realize that you forgot to take a deduction and you want to amend your income tax return to include the new information and either pay more tax or enjoy a refund.

Usually if the transaction you failed to include would result in an additional tax liability, the IRS will most likely pick up on it and you don’t have to worry about filing an amended return. If the missing document is  a 1099 or K-1, the IRS will automatically compare the entries on your tax return to those documents and will generate a letter (CP2000) and bill if you failed to include the information.

Failing to include these transactions should not leave you shaking in your boots. The IRS understands the concept of oversight and therefore is not searching for handcuffs and contact information, nor does it necessarily indicate that you should be audited. No revenue officers get involved at this level; it’s all done via computer. Thousands of CP2000 letters are sent every year. So rather than spending the time and money to amend the return, you can await the CP2000 and pay the attached tax bill.

But let’s say you failed to take a deduction on your tax return. If the oversight results in a substantial refund, it will likely be worthwhile to amend your tax return. But many taxpayers fear bringing attention to themselves by filing this form and therefore don’t file one. These returns are handled by individuals and so they may be scrutinized more fully, but if the deduction is not a red flag item, your numbers are all within the national standards and you can defend those numbers, then you have nothing to fear. I’ve filed hundreds of amended returns over the last three decades and only one has been selected for audit.

How to File an Amended Return 

If you decide not to amend your return, be sure to attach a sticky note on the front of the receipts or other paperwork with a note indicating the deduction wasn’t taken. Store it with your tax return and other supporting documents so that if your return is ever audited, you can submit the deduction to the auditor.

Always wait eight weeks for processing after filing your original tax return before submitting an amended return. Use IRS Form 1040X and follow the Instructions for Preparing Form 1040X. Make sure to attach documentation to support the changes you are making to your tax return. Also fill in the “Explanation of changes” to explain your actions. Attach a copy of your originally filed income tax return and mark it “As originally filed.”

It can take several months for the IRS to process an amended return, so be patient. If at any time you want to see where you are in the process, you can go to IRS.gov and click on “Where's My Amended Return,” or call 1-866-464-2050. You must provide your Taxpayer Identification Number (for most taxpayers that is their Social Security number), your date of birth, and your ZIP code.

According to the IRS, do not file Form 1040X if you are requesting a refund of penalties and interest or an addition to tax that you have already paid. Instead, file Form 843, Claim for Refund and Request for Abatement. And don’t file Form 1040X for an injured spouse claim. Instead, file Form 8379, Injured Spouse Allocation.