Filing an Amended Tax Return

Find out when it makes sense to file an amended return and possible consequences.

By , J.D. · USC Gould School of Law

What do you do if you discover any of the following after you filed your tax return for the year:

  • you forgot to take a deduction
  • you claimed a deduction that you were not entitled to take
  • you entered incorrect information on your return, or
  • a retroactive change in the tax laws makes you eligible for an additional deduction.

The answer is simple: File an amended tax return for the year.

Tax returns are not engraved in stone. You can amend a return any time within three years after the April 15 due date for the original return. If you obtained an extension to file, the three-year period runs from October 15; but, if you filed earlier than this, you must file with three years after the actual filing date. After the time limit expires you can't file an amended return for that year.

You need not amend your return if you discover that you made a simple math error. These will be corrected by the IRS computers, and you'll be notified of the change by mail. Also, you don't need to be quick to file an amended return if you discover you forgot to attach a Form W-2, left off a tax schedule, or made a similar minor error. The IRS will probably process your return anyway, or will request you provide the omitted forms if they're needed. However, if you made a mistake in your favor, failed to report income, or took deductions which you were not entitled to take, amending your return may avoid all or some fines, interest, and penalties if you're later audited by the IRS.

If you've been chosen for an audit, it is better not to file an amended return after the audit starts. Chances are that the audit group will not get the amended return, and filing an amended return will only create confusion. It is better to discuss any proposed change in your return with the revenue agent conducting the audit.

Some people refrain from amending their returns, even if they discover the IRS owes them money, because they believe it increases the chances of an audit. However, IRS officials deny that filing an amended return increases your audit chances. Amending your return will likely not result in an audit unless there is a substantial change in your taxable income without a reasonable cause. Of course, you're more likely to be audited if you claim the IRS owes you money, rather than the other way around.

You shouldn't be afraid to amend your return if you have a legitimate reason to do so. Just make sure you do it properly. File the proper form, usually IRS Form 1040X. You must file a separate 1040X for each year you want to amend. Clearly explain on the form the reasons why you are correcting your tax return--for example:

  • you received another Form 1099-MISC after you filed your return
  • you forgot to claim the child tax credit
  • you changed your filing status from qualifying widow(er) to head of household, or
  • you are carrying an unused net operating loss or credit to an earlier year.

You should have documentation to back up your claims.

Note that when you file an amended tax return you are supposed to correct all the errors that you discovered in your previously filed return. This includes errors not in your favor as well as those that reduce your tax liability.

You should receive your refund, if you're entitled to one, in up to 16 weeks. Alternatively, you can apply all or part of your refund to your current year's tax. However, your refund may be reduced by amounts you owe for past-due child support, debts you owe to another federal agency, or past-due state income tax obligations. You will be notified if this happens.

If the IRS denies your claim, it must explain why. You have the right to appeal such a denial.

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