If you discover, after you have filed your return, that you’ve overlooked a deduction or credit, or that you’ve forgotten to report income, you should file Form 1040X. Form 1040X: Amended U.S. Individual Income Tax Return is used to correct errors or omissions on your original return. You might receive an additional refund or you might owe additional taxes as a result of the correction.
If you’re due a refund, the IRS will send it to you once the amended return is accepted. If you owe tax as a result of the amended return, you should send the amount owed to the IRS along with Form 1040X. If any interest or penalty is due, the IRS will bill you.
Example: In June 2007, you discover that you didn’t include on your 2006 return the $500 dishwasher (fair market value) that you won on a game show. You should file Form 1040X for 2006 to include the $500 value in your income.
When you file Form 1040X, you must attach any form, schedule, or statement that changes or would have been required had your original return been filed using the current method.
Example: You originally filed Form 1040A. When you found that you hadn’t reported all your income, you also discovered that itemizing deductions would reduce your tax liability. You can claim your itemized deductions on Form 1040X, but you also need to complete Schedule A and attach it to the Form 1040X.
When amending a return for any reason, it’s a good idea to revisit your whole return. Look for deductions, credits, and exemptions that you might have missed the first time around. Also, review the filing status you used on your original return. Many taxpayers don’t realize they’re eligible for the head of household or qualifying widow(er) filing status, both of which can save them considerable tax dollars.
You must file an amended return within 3 years from the date you filed your original return, or within 2 years from the date you paid the tax, whichever is later. If your return was filed on or before the filing deadline, April 15 is considered the filing date. If an extension was granted, the date of filing is the actual date that you filed your return within the extension period, or April 15 if your return was filed after the extension period expired. If you’re amending your return because of a bad debt or worthless security, then you have 7 years after the due date of your original return to file the amended return.
Example: You want to amend your 2006 tax return, which you filed on April 2, 2007. Since the IRS considers the date you filed your return to be April 15, 2007, you have until April 15, 2010, to file an amended return.
Form 1040X has 3 columns. Use Column A to show the figures from your original return. However, if you previously amended that return or it was changed by the IRS, enter the adjusted amounts in Column A. Use Column C to show the correct figures. Report the difference between the figures in Columns A and C in Column B. On the back of the form, explain the specific changes being made on the return and the reason for each change.
Example: On your amended return, the explanation section on the back of Form 1040X would read:
Line 1 — Did not include fair market value of prize, $500.
Line 2 — Itemized deductions not claimed on original return. Schedule A attached.