What is a tax amendment?

If you realize you made a mistake on a previously filed tax return, you should file a tax amendment. The Internal Revenue Service (IRS) allows you to correct mistakes by filing an Amended U.S. Individual Income Tax Return (Form 1040-X), commonly referred to as an amended tax return.

Not all amendments require additional payments to the IRS; some may even result in a refund due to you. You might have missed a valuable tax credit or deduction you were entitled to, or you could have filed using a more tax-advantaged filing status such as Married Filing Jointly (MFJ) or Head of Household (HOH).

Common mistakes that need to be amended

You should file an amendment in these common tax situations.

Change in filing status

If you want to change your filing status, you can use the Form 1040-X. Assume you and your spouse usually file as married filing separately (MFS) for personal reasons. This year you have gone back to school and paid a considerable amount in tuition. It may benefit you to file as MFJ in order to be eligible for certain academic tax credits, as many credits are not available to those who file as MFS.

Change in dependents

After filing your tax return, you may realize that you claimed a dependent erroneously or missed claiming an eligible dependent. Not all dependent situations are straightforward. In specific situations, you may even claim elderly parents in your care as your dependent. If you realize you were eligible to claim an additional dependent, you should file an amended tax return.

Alternatively, you may have a custody situation that requires the other parent to claim your child as a dependent. If you previously filed a return claiming your child as your dependent, you would need to file an amended return to remove them.

Change in eligibility for tax credits or deductions

You should file an amended tax return if you realize you claimed a tax credit or deduction that you were not entitled to or missed a tax credit or deduction that you were entitled to.

Tax forms or documents arrived late

Certain tax forms may arrive in your mailbox later than others. For example, the IRS taxes partnerships as a passthrough entity, meaning the partners pay taxes on their share of the partnership's income when they file their personal tax returns.

The Shareholder's Share of Income, Deductions, Credits, etc. (Form 1065)(Schedule K-1) is not due to partners until March 15. Most other tax forms are due around the end of January. If you accidentally file your taxes prior to receiving your Schedule K-1, you will be missing your portion of the partnership's income on your personal tax return.

Legislation changes

Sometimes, lawmakers pass legislation that affects the current or previous tax years. If legislation changes make it so you're now eligible for deductions or credits that you were not previously eligible for, be sure to file an amended tax return.

For example, taxpayers affected by natural disasters are often offered tax relief related to costs incurred directly as a result of the disaster. It can take months for specific legislation to pass relating to these natural disasters, and you must file and pay your taxes by the due date. However, if tax relief is ultimately offered that would lower your tax liability, you can file an amended return to recoup the additional amount you previously paid.

Time limitations for amendments

If your amended return results in a refund to you, there is a statute of limitations. You must file Form 1040-X by the later of three years from the due date of the return—without regard to extensions—or two years from the date you paid the tax.

Mistakes that don't need an amendment

If you made a mathematical error on a tax return you manually filled out, the IRS will catch and automatically correct the error when processing your return. The IRS will explain in writing any refund due to you or extra tax owed by you as a result of this recalculation.