when to amend tax return
March 13, 2023

How and When to File an Amended Tax Return?

Personal Taxes

To err is human. The important part is to recognize your mistake and correct it in due time, especially if that mistake occurred on your tax return. But you must know how and, more importantly, when to file an amended tax return.

The IRS offers clear guidelines for why filing an amended tax return might be necessary and provides a legal timeframe within which taxpayers can do so.

You shouldn’t take any steps before the tax refund reaches your bank account, but there are several exceptions. We’ll show you how to file an amended tax return and choose the right moment to submit a corrected version of your tax return.

Correcting Tax Return Errors Before Filing Deadline

Correcting Tax Return Errors Before Filing Deadline

Sometimes the best course of action is to do nothing if you notice an error on your tax return shortly after filing it. That’s because the IRS often corrects math and administrative errors when processing a return without requesting the taxpayer’s assistance.

Filing an amended return might be unnecessary if you didn’t attach a certain schedule or form in your original tax return because the IRS will send you a letter informing you they need additional documents from you.

Moreover, you can file a superseding return before the filing deadline if you made a mistake or failed to attach an important document. The IRS will disregard the first tax return you filed and treat the second as the original one.

Reasons to Amend the Original Tax Return

The IRS website offers the Interactive Tax Assistant tool that helps taxpayers determine if they have to file an amended tax return. Hence the easiest way to find out if you have to correct or supplement the information you provided on the original tax return is to visit the IRS website.

Taxpayers are usually advised to file an amended tax return for a handful of reasons, so let’s take a closer look at them:

  • Unclaimed tax deductions and credits: Most taxpayers opt to file an amended tax return because they didn’t claim a credit or a tax deduction they were eligible for. However, doing so may not be worth the trouble if the credit or tax deduction you claim won’t affect your tax return significantly.
  • Unreported income – You must file an amended return if you receive corrected versions of Form 1099 or Form W2 from your employer that contain an income amount you didn’t report.

    You’ll also have to amend the original return if the new amount makes you ineligible for a tax credit or deduction you claimed initially. The IRS may increase the interest or charge a penalty if you fail to amend the reported income.

    Additionally, it is advisable to check if and by how much the amended income, tax liabilities, or deductions affect your tax debt.
  • Retroactive laws – An introduction of a new tax law might make you eligible for a refund of federal taxes you already paid. Filing an amended tax return, in this case, is optional and only makes sense if the refund amount is substantial.

    The Congress periodically approves a set of tax breaks, also known as ‘tax extenders,’ so you should keep up with the latest developments to make sure new regulations don’t apply retroactively.
  • Adding a Dependent to a Tax Return – You can file an amended return if you didn’t list all dependents on the original return. Your tax refund amount might increase by up to $2,000 if one of the dependents you listed on the amended return is eligible for the child tax credit.
  • Casualty loss deductions – If your property was damaged by a hurricane, earthquake, flood, or other natural disasters after you filed a return tax return for a certain tax year, you can file an amended return and claim a federal casualty loss deduction for the year in which the disaster took place.

Consider filing federal and state tax returns at the same time to minimize your overall tax costs and avoid amending the forms and schedules you submitted to the IRS. This will enable you to compare state and federal deductions and choose the most profitable option.

The best practice is to wait for the IRS to issue your tax refund before filing an amended tax return, as filing an amended tax return too early might cause unnecessary delays. Taxpayers can file amended tax returns:

  • Up to three years after filing the original return, provided that the return was filed before the filing deadline.
  • Two years after the date a taxpayer paid federal taxes

This rule has exceptions, so if you’re filing an amended tax return to claim a natural disaster casualty loss deduction, you must do it up to six months after filing the original return.

You should check the filing deadline if you’re filing an amended tax return for the following reasons:

  • Injury or service in a combat zone.
  • Foreign tax credits.
  • Uncollectible accounts expense (Bad debt).
  • Net operating losses.

Go through the Instructions for Form 1040-X document for the full list of amended tax return filing deadlines.

Which Documents to Include in an Amended Tax Return?

The process of filing an amended tax return isn’t complicated, as you just need to ensure all required documents are filled in correctly.

You must obtain Form 1040-X and provide copies of Form 1040, Form 1040-NR, or Form 1040 SR with the correct information.

In addition, you may be required to provide Schedule A or Schedule E if they’re relevant to the amended tax return you’d like to file. All e-filed amended tax returns must also contain Form 8879.

Hence you’ll have to alter the income or tax credit amounts and provide other information on these forms before filing them.

The IRS allows taxpayers to file Form 1040-X with the required attachments electronically or on paper. However, the e-filing option is only available for amended returns for the 2018 tax year and onwards.

Amended tax returns are filed with Form 1045 if a taxpayer claims a carryback or has repaid previously taxed income. Filing Form 843 might be necessary for situations when taxpayers are asking for a refund of interests or penalties they already settled.

It’s important to note that a new Form 1040-X, Form 1045, or Form 845 must be filed for each tax year.

The Average Processing Time of Amended Tax Returns

An e-filled amended return should enter the IRS system within three weeks after you submit it. You won’t be able to file an amended tax return in electronic form if you filed the original tax return on paper.

In that case, the amount of time the IRS needs to receive, accept and start processing an amended tax return could be longer than 21 days.

Due to Coronavirus processing delays, the processing time for e-filed and paper-amended tax returns has increased from sixteen to twenty weeks. Taxpayers can monitor the status of their amended tax returns with the Where’s My Amended Tax Return tool available on the IRS website.

This tool enables you to keep track of the status of amended tax returns you filed in the last three years, and you’ll have to provide your social security number, zip code, and date of birth to access it.

Contacting the IRS before the twenty-week deadline expires isn’t advisable, as you’re unlikely to get any information about the status of your amended tax return you cannot find online.

Frequently Asked Questions

Do I Have to Pay Penalties if I File an Amended Tax Return?

The resolution of the amended tax return doesn’t always go in the taxpayer’s favor. As a result, you may have to pay the penalty if you fail to settle due taxes 21 days after the IRS requests the payment.

The IRS also charges a 5% or 6% interest, depending on the quarter, on all taxes that aren’t paid before the due date, so you’ll likely have to pay an interest rate if you filed an amended tax return to change your total or taxable income.

How Many Amended Tax Returns Can I File?

You can file up to three amended tax returns per tax year. However, the IRS will only accept one and reject others.

Can I Speed Up the Processing Time of My Amended Tax Return?

The processing time for amended tax returns filed on paper and in electronic form is the same, and currently, taxpayers cannot take steps to accelerate the processing of their amended tax returns.

Why is My Amended Tax Return Taking More Than Twenty Weeks to Process?

The IRS may need over twenty weeks to complete the processing of incomplete amended tax returns. Routing to a specialized area, revenue officer review and approval, suspected identity theft, or clearance by the bankruptcy area within the IRS are also among the reasons why amended tax returns are delayed.

Final Thoughts

Preparation is key to filing an amended tax return successfully. You should start by determining if amending your original tax return is necessary and proceed to gather and review the documents required to file an amended return if it is.

Filing a superseding return might also be an option that can save you a lot of waiting time if you notice an error on your tax return before the filing deadline.

The IRS accepts amended tax returns for up to two after the date taxes were paid or three years after the original tax return was filed. Hence you’ll have plenty of time to file an amended tax return, but you should keep in mind that the average processing time is around five months.


Logan Allec, CPA

Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.

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