This article was fact-checked by our editors and Jennifer Samuel, a senior product specialist for Credit Karma.

When you discover an error on your federal income tax return or realize important information was omitted, you can file an amended return to correct the mistake? But what happens after that?

If it’s been a while since you filed your Form 1040X and you haven’t heard from the IRS, you may find yourself wondering, “Where’s my amended tax return?” You may be especially eager to know the status of your amended return if correcting the error could mean you’ll be getting money back.

Let’s look at how you can track your amended tax return after you’ve filed it with the IRS.

• Should I fix my tax return?
• Where’s my amended tax return?
• How long will it take to process my amended tax return?

Should I fix my tax return?

First, if you suspect there’s a mistake on your tax return and you haven’t yet filed an amended tax return to correct it, it may be worth your time to do so. Tax-return errors can be costly.

A mistake on your tax return might mean you underestimated — and therefore underpaid — the amount you owe, which could potentially lead to the IRS applying interest and penalties to your unpaid balance. Or it might mean you didn’t correctly calculate the refund amount you think you’re owed. It could be less, but it could also be more. And you should also consider how amending your federal return might affect any state taxes you filed, and contact that state taxing agency to find out how to file an amendment with them if necessary.

Don’t wait to file an amended return if you need to submit one. You generally  have to file an amendment within three years of when the original tax return was due (including extensions), or if you paid tax, within two years after the date you paid, whichever is later. If you file after the time limit, the IRS might not honor your amended return, and you could miss out on any refund that was owed to you.

If you already filed an amended return — good going! Now here’s how you can keep tabs on your amended return.

Where’s my amended tax return?

Generally, you can track your amended tax return in two ways.

1. Online — Even though you had to paper file and snail mail your Form 1040X, you can check its status online using the IRS Where’s My Amended Return tool. Enter your information and the tool will give you the status of your amended tax return.
2. By phone — You should try the online tool first, but if you have any issues checking the status of your amended tax return online — or if the tool instructs you to call instead — you can call the automated IRS line at 1-866-464-2050. But the IRS notes that phone representatives (as well as those at IRS locations) can’t research the status of your amended return until 16 weeks after you’ve mailed it, or if the online tool has instructed you to call the IRS.

But some types of amended returns can’t be tracked through the Where’s My Amended Return tool. For example, the tool can’t track a Form 1040 that’s been marked as amended or corrected, business amended tax returns or amended returns with a foreign address.

When should I start checking the status of my amended tax return?

When the IRS has to deal with a mailed form, things can slow down.

It can take up to three weeks for an amended return to show up in the IRS system, so it’s probably best to wait at least that long before you start checking. But once your amended return shows in the system, you can check its status daily if you want, because the tool updates every day.

What do the statuses mean?

Your amendment can be in one of three stages.

1. Received: The IRS has received your amended return and is processing it.
2. Adjusted: The IRS has made a change to your account that could result in a refund, balance due or no change in your tax obligation.
3. Completed: The IRS is done processing your amended return and has mailed you all of the information connected to its processing.

How long will it take to process my amended tax return?

Processing an amended tax return takes time — and sometimes a lot of it.

The IRS says processing an amended return can take up to 16 weeks. And certain situations may require more review, making the processing time even longer. Here are some reasons for delays.

• Errors on the amended return
• The amended return was not completed
• You forgot to sign the return
• The IRS sends the amended return back to you with a request for more information
• You or your spouse sought injured spouse relief
• Possible identity theft or fraud
• The amended return needs to be routed to a specialized area
• The IRS bankruptcy team needs to review the amended return
• A revenue office needs to review and approve the amended return
• You have an appeal or request for reconsideration pending IRS review and decision

Where’s my refund?

Processing an amended return can take more time than processing an original return. This also applies to getting a refund if your amended return results in one.

The IRS can’t deposit a refund from an amended return directly into your bank account. Instead, it’ll mail you a paper check.

But there’s good news, too. When you file your Form 1040 and get a refund, the government is returning money that you overpaid in federal income tax during the tax year — and the government typically doesn’t pay interest on that money. But when you’re due a refund because of an amended return, the IRS does pay interest — generally from the due date of the original return or the date you filed it, whichever is later.

Bottom line

Tracking your amended tax return can be easy once you know the process, but you’ll need to be patient. A lot of the amended return process happens via paper, from the form you submit to any refund check you’re owed.

And while online tax preparation and filing services may be able to help you prepare and print your Form 1040X in order to mail it, only the IRS can help you track the status of your amended return.

Jennifer Samuel, senior tax product specialist for Credit Karma, has more than a decade of experience in the tax preparation industry, including work as a tax analyst and tax preparation professional. She holds a bachelor’s degree in accounting from Saint Leo University. You can find her on LinkedIn.

When a storm damages your home or a burglar steals valuables from your home or vehicle, you probably turn to insurance to reimburse you for your loss.

Insurance companies pay out billions of dollars every year to cover such expenses — known as casualty losses. In fact, insured losses due to natural disasters in the U.S. totaled $78 billion in 2017, according to the Insurance Information Institute. That number increased to $91 billion in 2018, the National Oceanic and Atmospheric Administration reports.

But sometimes the insurance you have doesn’t cover an entire loss. Or worse, you may not have insurance coverage at all. If either is the case, you might be able to take a casualty-loss deduction on your federal income tax return, provided you meet some specific criteria.

• What is a casualty loss?
• What is the casualty-loss deduction?
• Changes due to tax reform
• Federally declared disaster areas
• How to claim the casualty-loss tax deduction
• Casualty loss gains

What is a casualty loss?

It’s important to understand what constitutes a casualty loss and what doesn’t.

Normal wear and tear or progressive deterioration over time doesn’t add up to a casualty loss. To qualify as a casualty loss, the damage, destruction or loss of property must arise from a sudden, unexpected and unusual event, like a flood, hurricane, tornado, fire, earthquake or volcanic eruption.

For example, if your home’s roof needs to be replaced because it’s 30 years old and your insurance doesn’t cover the replacement, that wouldn’t be considered a casualty loss. But if the roof is damaged in a storm, that could be a casualty loss.

Causes of casualty losses can include (but aren’t limited to, and there are exceptions) …

• Earthquakes
• Fires
• Floods
• Demolition or relocation of a home, at the government’s order, because a disaster has rendered the home unsafe
• Sonic booms
• Storms, including hurricanes and tornadoes
• Vandalism
• Volcanic eruptions

What is the casualty-loss deduction?

When your home or personal property is damaged in a disaster, you might be eligible to take a casualty-loss tax deduction — but there are specific rules for who can take this deduction.

Prior to tax reform, any taxpayer who experienced a casualty loss, and who qualified for a casualty-loss tax deduction, could take the deduction by itemizing on Schedule A. To deduct casualty losses for property for personal or family use, you had to reduce each casualty loss by $100 and the total had to be more than 10% of your adjusted gross income.

Taxpayers could also deduct casualty losses due to theft. The theft must have been considered illegal in the state where it occurred and done with criminal intent. You may only deduct the theft in the year that your property was stolen.

If you met the criteria for the casualty-loss tax deduction, you could take the deduction regardless of where the loss occurred. But the Tax Cuts and Jobs Act of 2017 changed the criteria for the deduction, and now where your loss occurs helps determine if it’s deductible or not.

Changes due to tax reform

Tax reform drastically limited who can claim the casualty-loss tax deduction for personal losses.

Now, only taxpayers whose personal losses occur in a federally declared disaster area may be eligible to claim a casualty-loss tax deduction. So the president must declare the region a disaster area in order for losses in that area to be deductible.

This provision effectively excludes many events that previously could have been the cause of deductible losses.

For example, if you had property damage due to a severe summer storm, prior to tax reform you might have been able to take a casualty-loss deduction for that damage (provided you met all the other criteria for taking the deduction). But not every summer storm will warrant a federal declaration of a disaster — and unless that occurs, storm victims in the area won’t be able to claim a casualty-loss tax deduction.

And theft losses are only deductible if they can be attributed to a federally declared disaster as well.

But if you do live in a federally declared disaster area, there’s good news from tax reform. If you’re eligible for the casualty-loss tax deduction, you can claim it without having to itemize your deductions. The amount of your loss no longer needs to exceed 10% of your AGI, but the $100 per-casualty limit has now increased to $500 per casualty.

These changes are temporary, though: The tax reform bill applied the changes only to tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026. It’s also important to note that the limitations only apply to personal casualty losses, not casualty losses experienced by a business.

Federally declared disaster areas

How do you know if your area is considered a federally declared disaster area? The Federal Emergency Management Agency, or FEMA, maintains a list of disasters that’s searchable by incident type, declaration type and date of incident.

Here’s a partial list of federally declared disaster areas from events that occurred in 2018.

• Alaska earthquake
• California wildfires
• Alabama, Georgia and Florida (Hurricane Michael)
• Virginia (Hurricane Florence)
• Hawaii (Tropical Storm Olivia)
• North Carolina and South Carolina (Hurricane Florence)
• Hawaii (Hurricane Lane)

FEMA oversees the process for declaring a federal disaster area. It starts with an affected state or tribal government asking FEMA to conduct a preliminary damage assessment. Certain tribal governments can also request a declaration directly from the president.

There are two types of declarations.

• Emergency declarations — The president may issue an emergency declaration when he or she determines the affected region requires federal assistance.
• Major disaster declarations — For an emergency to be declared a major disaster, the president must determine the event has caused damage so severe that the state or local governments wouldn’t be able to respond.

How to claim the casualty-loss tax deduction

Calculating a casualty-loss deduction isn’t as straightforward as submitting receipts or repair estimates and asking for reimbursement. It takes a bit of work — beginning with determining your actual loss.

Calculating actual loss

For personal-use property like a home or car, or for other property that is only partially destroyed (the roof is gone but the walls are still standing), your casualty loss is either the adjusted basis of the property or the decrease in fair market value of the property as a result of the damage, whichever is less.

For business or income-producing property that is completely destroyed, your casualty loss is the adjusted basis of the property, and for theft, the casualty loss is typically the adjusted basis of the property.

Figuring in insurance reimbursement

Once you know the amount of your loss, you must deduct any insurance or other reimbursement you received for the damaged property to arrive at your loss after reimbursement. From that amount, you would subtract $500 (the per-casualty limit). The final product of your calculations should be your casualty-loss tax deduction.

Let’s look at an example. Joe’s personal car gets caught in flooding in a federally declared disaster area and is totaled as a result. His adjusted basis for the vehicle is $12,000 (he uses adjusted basis because it’s less than the decrease in the fair market value of his vehicle). Insurance pays him $7,000 for his loss.

Here’s the calculation for Joe’s casualty loss tax deduction.

$12,000 (Joe’s loss) – $7,000 (insurance payout) = $5,000

$5,000 – $500 (per-casualty limit) = $4,500 (Joe’s casualty-loss deduction)

When to report

Generally, you must deduct a disaster loss on your tax return for the same year the disaster occurred. But if your loss occurs from a federally declared disaster, you may be able to apply your casualty-loss tax deduction to your tax return for the year before the disaster happened.

IRS Publication 547 has detailed information on casualty losses.

Casualty loss gains

If you experience a casualty loss and receive insurance reimbursement for more than the adjusted basis of the damaged, destroyed or stolen property, you may have a casualty gain that you’ll have to report as income.

The adjusted basis of property is generally how much you paid to buy the property, plus anything you did to improve the property and increase its value, and minus anything that happened to decrease its value.

You may not have to report the gain as income if it came about because your main home was destroyed. If you meet the qualifications, you may be able to exclude up to $250,000 of your gain ($500,000 if married filing jointly) from your income.

There are detailed rules for how to report gains from different kinds of casualty losses. Again, check out IRS Publication 547 to learn more.

Bottom line

Insurance to cover valuable property can be expensive, but going without it can be even more costly if disaster strikes — especially since you can’t deduct casualty losses that occur outside a federally declared disaster area.

If you do suffer losses as a result of a federally declared disaster, it’s important to understand how the casualty-loss tax deduction works and when you can take the deduction. You’ll need to reduce your loss amount by any reimbursement you receive for the loss, plus the $500 limit. But with the suspension of the 10% AGI requirement, you may be able to recoup more of your uninsured, unreimbursed losses.

A senior product specialist with Credit Karma, Janet Murphy is a CPA candidate with more than a decade in the tax industry. She’s worked as a tax analyst, tax product development manager and tax accountant. She has accounting degrees and certifications from Clemson University and the U.S. Career Institute. You can find her on LinkedIn.

Another benefit of e-filing: You can get a tax refund sooner. The IRS says you can usually receive your refund within three weeks (or less) from the time they IRS receives your return if you have your refund directly deposited into your financial account. A paper return can take up to two months to process.

Whether you prefer the advantages of e-file or like the traditional route of filing a paper return, there are certain situations in which you may not have a choice. Let’s look at five scenarios for when the IRS could require you to file a paper return.

When you have to paper file a tax return

Although the IRS urges taxpayers to e-file whenever possible, there are also times when the service requires taxpayers to mail in a paper return and other tax forms.

1. You missed the e-filing deadline — and can’t wait

Typically, your federal income tax return is due on April 15 (or thereabouts) every year. You can usually get a filing extension to Oct. 15, although that’s not an extension of time in which to pay your taxes. Any tax you owe is still due Tax Day.

You can e-file a return at any time of year — except when the IRS shuts down its Modernized e-File system , or MeF, to prepare for the next year’s tax filing season. Last year, the shutdown deadline was Nov. 17.

If you absolutely can’t wait until the IRS begins accepting e-filed individual tax returns (usually in late January of the following year) again, you might have to file a paper return.

2. You need to file an amended return

There are many reasons why you might need to file an amended tax return, but there’s only one way to do it:  You’ll have to mail a paper Form 1040X to the IRS.

Even if you use an online tax preparation and filing service  to complete the 1040X, you’ll still need to print and mail it.

3. You’re seeking relief as an injured spouse

If your spouse owes certain kinds of debt — such as past-due taxes, state debts, unpaid student loans or late child support payments — and you file a joint federal tax return, the U.S. Department of the Treasury might be able to take some or all of your joint refund to pay that debt. Requesting injured spouse relief could help you keep the portion of your shared refund that is yours, while your spouse’s share goes toward paying their debts.

To apply for injured spouse relief you must complete and submit Form 8379. If you submit the form at the same time you file your joint return, you can e-file both together. However, if you already filed your federal return and it was accepted (for example, you discovered the IRS might take your refund after you filed), you’ll have to mail it.  And if you’re submitting it with an amended tax return, both must be filed on paper.

4. Your e-filed return keeps getting rejected

Returns can be rejected for many reasons. If it’s something minor, like a misspelled name or a missing form, you may be able to correct your return by resubmitting your e-filed return.

But you may have to file your return by mail if the IRS rejects your return for a bigger problem — such as someone else using your Social Security number or if someone on your return has already been claimed as a dependent on another already-processed return.

5. Taxpayers who live or work outside the U.S.

If you are a U.S. citizen or resident alien who lives or works outside the United States, you will have to mail your return.

If you expect a refund or aren’t including a payment with the return, you can mail it to:

Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215

If you’re sending a payment, mail the return and your check or money order to:

Internal Revenue Service
P.O. Box 1303
Charlotte, NC 28201-1303

How to file a paper tax return

In many ways, preparing a paper return is very similar to preparing an electronic one. The information you’ll need to fill in is the same, and the IRS rules for deductions, credits and other tax breaks are the same, too.

You may even be able to use tax software or a filing service that does calculations for you to prepare your return and then print it out afterward.

Filing a successful paper return requires you to take special care that your return is error-free and meets the requirements specified by the IRS. Here are some tips that can help you file your paper return.

• Make sure you have names, addresses and Social Security numbers correct on all forms and for everyone named on the forms.
• Check your data entry and double-check your math.
• Remember to attach copies of your W-2s or any other income statements, required forms or documentation that should be included with your return.
• Be sure to sign and date your return. If you are married filing jointly, make sure both spouses have signed and dated the return. The IRS won’t consider your return valid without the required signatures.

If you’re expecting a refund and want it directly deposited into your bank account (remember, the IRS says that’s the fastest way to get your refund), write your direct deposit information on the specified line of your 1040.

Fill out your 1040 and any accompanying forms by following the instructions for each form, attach a copy of your W-2, other required income statements and forms, and place everything in an envelope. If you’re not sure where to send your paper return, you can look up mailing addresses for your state online.

Bottom line

If you’re required to paper file a tax return, don’t be intimidated. Remember, before 1986, when the IRS began allowing taxpayers to electronically file their returns, everyone completed and mailed paper returns.

Successfully paper filing a tax return can be just as easy as e-filing. Just be sure to follow the instructions with your Form 1040, 1040X or other necessary paper form, double-check your data entry and math, and be sure to mail everything on time to the correct IRS office with the right amount of postage.

Jennifer Samuel, senior tax product specialist for Credit Karma, has more than a decade of experience in the tax preparation industry, including work as a tax analyst and tax preparation professional. She holds a bachelor’s degree in accounting from Saint Leo University. You can find her on LinkedIn.

Still, the Internal Revenue Service has a job to do, and sometimes that involves communicating directly with taxpayers. But scammers, fraudsters and con artists may also try to contact you, and may do so posing as the IRS.

That’s why it’s important to understand how the IRS might contact you — and how they wouldn’t. Once you know how to communicate with the IRS, you’ll also be better equipped to deal with any tax issues that may arise.

• How does the IRS contact you?
• Check credentials
• Ways the IRS won’t contact you
• What to do when the real IRS contacts you

How does the IRS contact you?

The Internal Revenue Service has a straightforward contact process. There are typically three ways the IRS will contact you: a mailed letter, a phone call or a personal visit.

IRS notices

The IRS usually (though not always) contacts taxpayers by first sending a letter — called a notice — through the U.S. Postal Service.

Here are a few of the many reasons you might get a notice from the IRS.

• You have an outstanding tax balance.
• Your refund won’t be as big as you expected.
• The agency has a question about a tax return you filed.
• It needs additional information in order to process your tax return.
• It’s trying to verify your identity.
• It’s alerting you to changes or corrections on your tax return.
• It’s letting you know there’s a delay in processing your return.

The initial notice will explain why the IRS is contacting you and what your next steps are. Usually the letter will include an identifying number either at the top or bottom right corner, as well as a contact number and address in case you’d like to follow up with the IRS.

Phone calls

If the IRS needs to get ahold of you after first contacting you by mail, an agent may call you to discuss a scheduled audit or confirm an appointment time.

For example, if you have an overdue tax bill and haven’t paid it or responded to the IRS notice, you may receive a phone call. An agent could also call to arrange an in-person visit if you’re being audited — but remember, you would have received a written notification of the audit first.

You may even get a phone call from a private debt collector seeking to collect an outstanding tax bill that’s been deemed “inactive” — but only after you’ve already received written notice of the bill. And those debt collectors must respect your rights and follow the rules of the Fair Debt Collection Practices Act when trying to collect your tax debt.

IRS visits

It may sound like the stuff of nightmares, but it is possible an IRS agent could make an unannounced visit to your home or place of business.

This can happen if you have delinquent taxes or a delinquent tax return, or if your business is falling behind on payroll taxes. IRS revenue agents may also visit your home or your tax professional’s office as part of an audit — but only after mailing you a notice of the appointment or arranging an appointment with you.

An important thing to know: A visiting IRS agent may ask you to pay any tax bill you owe, but they will always ask for your payment to be made to the U.S. Treasury. The bottom line is that anyone who says they’re with the IRS and asks you to make your payment to anyone other than the U.S. Treasury could be a con artist trying to scam you out of your money.

And remember, any legit scenario is typically preceded by a letter notifying you of the situation.

So even though you might not be expecting the IRS agent who shows up on your doorstep, and they might not tell you they’re coming, you would at least be aware the IRS was trying to communicate with you regarding a tax issue.

What are my rights when dealing with the IRS?

In 2014, the IRS adopted a Taxpayer Bill of Rights, listing 10 fundamental rights every taxpayer has when dealing with the IRS. The code addresses issues like your right to be informed, to receive quality service, to pay no more than the correct amount of tax you owe, and to challenge the IRS if you disagree with its position.

If the IRS is conducting a criminal investigation, law enforcement agents may go to a taxpayer’s home or place of business unannounced. In those cases, the agent will be investigating the case and won’t demand payment of a tax debt.

Check credentials

Whether you receive a letter, phone call or visit from an IRS agent, always ask for credentials.

Types of credentials to check include the following:

• A pocket commission detailing the authority of the agent and their responsibilities (every IRS representative must have this)
• A personal identity verification credential (or PIV), a government-wide standard used to identify all federal employees and contractors

Ways the IRS won’t contact you

Technology has certainly changed the way we communicate. In many areas of life, text messages have replaced phone calls, emails have replaced mailed letters and social media has made everything and everyone very accessible.

But one way the IRS will never contact you is via social media. The agency will never send a message to your direct messages. The IRS will not send text messages to your cellphone, demanding payment. And it’s not likely that the IRS will contact you via email.

Phishing emails and IRS scams are big concerns for the U.S. Treasury Inspector General for Tax Administration. If you receive a demand for payment of taxes in any way other than through an official letter, question the individual making contact and independently research their claims – such as by calling and confirming with the IRS – before you take any action.

Remember, the IRS will never …

• Call you to demand payment without first mailing you a bill
• Demand payment without giving you the chance to question or appeal how much they say you owe
• Require you to use a specific form of payment, such as gift cards or a prepaid debit card
• Ask for credit or debit card numbers over the phone
• Threaten to have you arrested for not paying

What to do when the real IRS contacts you

If you receive a notice from the IRS, the first thing you should do is read the notice carefully. You need to understand what the agency is asking or requiring you to do.

If you have questions, call the phone number located at the top corner of the notice. When you call the IRS, make sure you have a copy of your tax return(s) in question and the notice readily available.

If you receive a phone call from the IRS and you’re not sure it’s valid, you can call the IRS customer service line at 1-800-829-1040 to verify it. Never blindly give out any information to anyone over the phone without verifying that you’re indeed speaking with a credentialed agent of the Internal Revenue Service. Take down their contact information and tell them you’ll call them back after you have researched the issue.

Bottom line

The IRS contacts millions of taxpayers each year, and you might end up being one of them. But don’t get intimidated if you receive a notice.

Always remember to ask why the agency is contacting you. Many matters are easy to handle on your own just by communicating with the IRS. The sooner you acknowledge the issue, the faster you can resolve the matter and move on.

This article was fact-checked by our editors and Tolla Tu, tax specialist with Credit Karma.

You may hope for a nice refund when you file your federal income tax return, but sometimes you can end up owing Uncle Sam.

When that happens, what will you do if you don’t have the money to pay your full tax bill by the due date? An IRS online payment agreement could help make your bill more manageable. But there may be fees, interest and penalties associated with entering into a payment agreement with the IRS.

Here’s information to consider if you’re thinking about asking for an IRS online payment agreement.

• What is an IRS online payment agreement?
• How does an IRS online payment agreement work?
• Help for low-income taxpayers
• Advantages of IRS online payment agreements
• Disadvantages of IRS online payment agreements
• Keeping up with your payment plan

What is an IRS online payment agreement?

When you can’t pay your taxes in full by the due date, the IRS offers online payment agreements that give you more time to pay the amount you owe. You’ll need to meet certain qualifications, and you’ll have to apply for the online payment agreement through the IRS website. You can also apply for a payment agreement by phone, mail or in person at an IRS office.

Typically, if you owe individual income tax of $50,000 or less, and can pay it off in 72 monthly payments or fewer, you’ll be eligible to set up a payment plan. You’ll also need to be current on all filing and payment requirements, and not be in bankruptcy proceedings.

The IRS currently offers short-term and long-term payment plans. Short-term payment plans are for debts that you think you can repay in 120 days or less. Long-term payment plans are for debts that you will need more than 120 days to repay.

Depending on your balance and the length of time you need to pay off your debt, you can choose which plan will work best for you.

How does an IRS online payment agreement work?

First, you should file your federal income tax return on time and pay as much of the tax you owe as possible. Doing so can help reduce any penalties you might face for not filing on time.

You can also file your return and submit it with Form 9465, Installment Agreement Request. Or you can file and then request an installment agreement. If you wait to set up the agreement until you receive a bill from the IRS, the bill will include a toll-free number you can call to ask for an installment agreement.

When you’re ready to apply for a payment agreement, you’ll need to figure out if you require a short-term or long-term plan.

How short-term payment agreements work

When you can pay the amount you owe in 120 days or less, you can request a short-term payment agreement. You can apply for a short-term agreement online, by phone, mail or in person.

There is no fee to set up the arrangement. However, you will be responsible for paying the penalties and interest that will continue to accrue until your balance is paid in full.

You can pay by automatic debit from your checking account, or by sending a check, money order or debit or credit card number with your payment. If you pay by card, fees will apply.

How long-term payment agreements work

If you know you’ll need more than 120 days to pay the amount you owe, you can request a long-term payment agreement. They come in two basic formats — payments through automatic withdrawals and payments through a non-direct debit method of payment.

If you pay through automatic withdrawals, there’s a $31 fee to set up the arrangement online ($107 for phone, mail or in-person setup). You’ll also be responsible for interest and penalties accrued until you pay your balance in full.

If you pay through other means, such as a debit or credit card, check or money order, the setup fee is $149 for an online application, and $225 for all other ways of applying (by phone, mail or in person). There are payment options for eligible low-income applicants.  Again, you’ll be required to pay penalties and interest that will continue to accrue until you’ve completely paid off the amount you owe. And paying with a card will mean additional fees.

Changing a payment agreement

If you already have an IRS payment agreement and it’s not working for you, you can ask to have it revised. You can apply online, by phone, mail or in-person. The change fee will be $89. Other payment options are available for low-income applicants.

Help for low-income taxpayers

If you have a lower income, the IRS may waive or reimburse the setup fees for making an online payment arrangement. To be considered low-income, your adjusted gross income must be at or below 250% of the applicable federal poverty level.

The IRS system can determine automatically if you qualify as low-income. Your setup fees will be waived if you agree to pay through direct debit. If you don’t sign up for direct debit, your fee will be reimbursed once you complete the installment agreement. If the system doesn’t automatically waive your fees and you believe that you qualify for the waivers, you can still apply for assistance by filing Form 13844. It is important that you submit the paperwork within 10 days from the date of your installment agreement acceptance letter and mail the application to:

Internal Revenue Service
PO Box 219236, Stop 5050
Kansas City, MO 64121-9236

Advantages of IRS online payment agreements

IRS online payment agreements are convenient. You don’t have to sit on the phone waiting to talk to someone at the IRS about setting up a payment arrangement. It is easy to set up and can save time.

A payment arrangement can also help you budget because you’ll know how much money to set aside for the expense. The online portal gives you access to your tax account, which will allow you to track your payment history. You can monitor your payments and set goals to eliminate your outstanding balance. If something comes up and you need to change your plan, you can opt to change your agreement.

Disadvantages of IRS online payment agreements

By now, you probably realize that online payment agreements — or an IRS installment agreement of any kind — isn’t without drawbacks.

First, not everyone will qualify for a payment agreement. And entering into a payment agreement doesn’t halt penalties and interest. They will continue to accrue until you pay the full amount you owe. So your balance can actually increase even while you’re paying it down. You could end up paying way more than you originally owed.

And you have to stay on top of payments. If you default on your IRS payment agreement, the IRS will send you a notice letting you know they intend to terminate your installment agreement. You should fix the problem or contact the IRS as soon as you can, but no later than 30 days from the date of the notice. Otherwise, the IRS will terminate your installment agreement. The IRS can file tax liens against your property and could activate a wage garnishment.

Keeping up with your payment plan

Your online tax account will help you keep up with your scheduled payments. Each month review your payments, and compare your balance owed. File all your tax returns on time and pay at least your minimum amount due. If you ever feel as if you can’t pay your scheduled payment, you should call the IRS at 1-800-829-1040 to discuss your options.

Try not to default on your IRS online payment agreement. If you default, you may have to reinstate the agreement — and there may be fees for that. Defaulting will make your payment plan costlier by adding the extra fees on top of what you already owe.

Bottom line

No one wants to owe the IRS. If you end up owing a large amount, you may want to look at your current tax withholdings. Having more money withheld throughout the year could help reduce your tax bill, or even score you a refund if you overpay.

It’s a good idea to do a midyear tax checkup to check your withholdings. You can check tax withholding by using this IRS calculator.

Relevant sources: IRS: Additional Information on Payment Plans | IRS Publication 5123: Got a tax bill you can’t pay? | IRS Tax Topic No. 202: Tax Payment Options | Treasury Inspector General for Tax Administration Report 2013-30-121 | IRS: Enforced Collection Actions

A tax specialist with Credit Karma, Tolla Tu has international experience in accounting, tax, finance, banking and consulting. She holds a bachelor’s degree in financial management from Beijing University of Chemical Technology, a master’s in corporate finance from Central University of Finance and Economics as well as a Master of Professional Accountancy from Montana State University. You can find her on LinkedIn.

In the past, you may have had your parents, or their tax preparer, file your taxes. But now that you’re a working professional, you’ll want to take charge of your own finances. This is the year — you’ve decided you’ll prepare and file your own federal tax return.

Mistakes can happen the first time you attempt anything in life, and filing your own taxes is no different. Messing up on your tax return can cost you money, but you can take steps to avoid some common rookie tax-filing errors.

Here are some common first-time filer mistakes and how you can avoid making them on your federal tax return.

1. Not filing at all
2. Filing without all your tax documents
3. Picking the wrong filing status
4. Overlooking the benefits of itemizing
5. Failing to report all your income
6. Missing education credits or tax deductions
7. Making a clerical mistake
8. Paying for ‘free’ software to file your taxes
9. Paying fees to get an advance loan on your refund
10. Not knowing if your parents are claiming you as a dependent on their taxes

1. Not filing at all

You think: “I didn’t make much money, so I don’t have to file!”

That assumption could be a costly mistake. A number of factors determine whether you have to file, such as your age, income and marital status. For example, if you’re single, earning $12,000 (the standard deduction for the single filing status) or more means you’ll have to start paying taxes. And if an employer withheld federal income tax from your paycheck, you could be eligible for a refund — but you must file a tax return to get it. Check Box 2, Federal income tax withheld, on your W-2 to see how much in federal taxes you had withheld for the year.

Not filing could also mean you miss out on refundable credits you may be eligible for, like the earned income tax credit.

2. Filing without all your tax documents

It’s a good idea to file your federal income tax return as soon as possible. But being in too much of a rush can work against you. For example, you may forget to report income you earned and file before you receive a Form 1099 for that work. And after you file, you receive the 1099 — and then a letter from the IRS stating you owe more tax because of the under-reported income.

Take time to ensure you received all your income statements and any other documents you might need. By law, most companies are required to have income statements such as W-2s and 1099s sent out by January 31 — wait for all of them to arrive before filing your taxes.

3. Picking the wrong filing status

If you make the mistake of choosing the wrong filing status, you could end up costing yourself some money. For example, if you’re unmarried and have a child who lives with you, choosing the single status will allow you the standard deduction of $12,400. But your dependent child may help you qualify for the head-of-household filing status, which has a standard deduction of $18,650 — that’s a difference of $6,250!

What are the standard deduction amounts for 2020?

The standard deduction amounts for 2020 are:

• $12,400 for single filers
• $18,650 for head of household
• $24,800 for married couples filing jointly
• $12,400 for married couples filing separate returns

4. Overlooking the benefits of itemizing

Itemizing your deductions could allow you to deduct more expenses versus taking the standard deduction. Some commonly itemized deductions are medical expenses, state and local taxes, personal property tax, mortgage interest and charitable contributions.

For example, say you’re a single taxpayer and you itemize qualifying deductions that add up to $16,000 — you’d be able to deduct $3,600 more than if you just took the standard deduction ($12,400) for your filing status. So if you have a lot of deductible expenses in a tax year, check to see if you have enough to beat out the standard deduction.

5. Failing to report all your income

Say you held down a side job most of the year cutting yards in a few neighborhoods near your home. You made $4,500 during yard-cutting season, and your customers paid you in cash. You’re tempted to omit that self-employed income from your tax return, thinking that if you don’t report it you won’t have to pay taxes on it. But this is a mistake for several reasons.

Not only are you risking penalties and interest on any unpaid tax and the potential for other serious consequences, you’re also cheating yourself out of some expenses that could help lower your tax burden. Filing a Schedule C will allow you to report qualifying business expenses — like fuel for the lawnmower, gas to drive to and from customers’ houses, and the flyers or business cards you printed up to get customers. You might even be able to deduct depreciation on your lawn equipment!

6. Missing education credits or tax deductions

If you attend college or have recently graduated, you may qualify for an education credit or deduction, such as the American opportunity tax credit, the lifetime learning credit or the student loan interest deduction.

A tax credit directly reduces the amount of tax you owe and could give you a bigger refund if it’s a refundable credit like the AOTC. A tax deduction reduces the amount of income you have to pay tax on, meaning you could end up owing less.

When you miss a credit or deduction, you essentially leave money on the table.

7. Making a clerical mistake

Tax preparation requires a great deal of data entry. Before hitting the submit button to e-file, review your return carefully to ensure you’ve correctly entered key information, including …

• Your full name, spelled correctly
• Your date of birth
• Social Security number
• Calculations (such as your income sources adding up to the total income you’re reporting)
• Checking account number and routing number if you’ve chosen direct deposit for a refund

Mistakes can cause the IRS to contact you to correct or reject a return, and even delay any refund you’re owed.

8. Paying for ‘free’ software to file your taxes

If you’re not confident about doing something on your own for the first time, you may think you need to pay a tax preparer to do the work for you. But tax-preparation software and online services have made it easier than ever to self-prepare and e-file your federal and state income tax returns.

Be aware that not all “free” tax software options are truly free. Some may allow you to start your taxes for free and charge you a fee to e-file your return. Others may allow you to do simple returns for free, or your federal return for free, but charge for more-complex tax situations or if you also want to file a state return. Be sure to read the fine print before committing to a provider.

9. Paying fees to get an advance loan on your refund

Most federal income tax refunds typically come within 21 days after you e-file a federal return. But if you want money more quickly, you may consider applying for a refund advance. Refund advances are essentially loans that you borrow against your anticipated tax refund.

Refund-advance products typically come with fees and limitations that vary based on the loan provider. And take note: If your refund turns out to be less than anticipated, you’ll still be on the hook for any refund-advance fees.

Before you take any kind of refund-anticipation product, carefully weigh the benefits against the fees and risks. You might decide waiting (often 21 days or less if you e-file) isn’t that bad after all.

10. Not knowing if your parents are claiming you as a dependent on their taxes

Your parents may have been claiming you for years and filing your taxes for you. But now, you’d like to file your own taxes. Before you prepare your return, talk with your parents so that everyone’s on the same page. If your parents have been paying for your college expenses, they may want to claim you on their taxes, so that they can claim education credits. But if you paid more than half your own expenses for the year, your parents can’t claim you as a dependent on their taxes.

Bottom line

Filing taxes on your own can be simple and cost effective. Once you know what not to do, you can feel confident filing your first return. Take your time — don’t rush when preparing and filing your return. Mistakes are less likely to happen when you’re prepared. And if a mistake does occur, try not to stress about it too much. Remember, you generally have up to three years from the date your return was filed to correct your mistake by filing an amended tax return.

Relevant sources: IRS: Steps to Take Now to Get a Jump on Your Taxes | IRS: 2020 Form W-2 | IRS: Choosing the Correct Filing Status | IRS: Topic No. 501 Should I Itemize? | IRS: American Opportunity Tax Credit: Questions and Answers | IRS: Eight Common Tax Mistakes to Avoid 

A senior product specialist with Credit Karma, Janet Murphy is a CPA candidate with more than a decade in the tax industry. She’s worked as a tax analyst, tax product development manager and tax accountant. She has accounting degrees and certifications from Clemson University and the U.S. Career Institute. You can find her on LinkedIn.

Imagine you just realized that you made a mistake on your federal income tax return, or failed to claim an important deduction. Knowing that you messed up your taxes can be stressful. Your error could mean receiving a lower refund than you should — or even getting hit with interest and penalties if you owe more tax than you thought.

But don’t stress. To claim a refund, you typically have up to three years from the time you filed your original return, or within two years from the date you paid the tax — whichever is later — to go back and amend it.

Let’s check out some scenarios when you might need to file an amended tax return.

• What is an amended tax return?
• What are some common reasons to file an amended tax return?
• Is there a time limit for amending a return?
• How can I file an amended return?

What is an amended tax return?

To amend something means to change it, and that’s exactly what you do when you file an amended tax return. You change your tax return to reflect new information.

Filing an amendment may seem confusing because you must complete extra forms in addition to the original 1040. Anytime you need to change your filing status, income, deductions or credits, you will need to file a 1040-X amended tax return along with any forms or schedules that you’re changing.

The 1040-X reports your original numbers as well as your new numbers along with a calculation of the difference between the two. To file an amended return, you will need the original copy of your return and the new information that needs to be changed.

What are some common reasons to file an amended tax return?

No one is perfect, and mistakes are bound to happen. But you can fix the mistakes by filing an amendment. Here are some examples of common scenarios that could require you to file an amendment.

1. You filed your taxes and then received another W-2 or other income statement

After you filed your taxes, you received a W-2 for a job you held for only a few weeks. The amount on the form may be just a few hundred dollars, but it could still affect your taxes. Or you received an interest statement for a bank account you had forgotten about.

The IRS expects you to report all of your income for the year. In this situation, it’s best to file an amended tax return.

By law, employers and businesses are required to send all income statements, such as W-2s and 1099-MISC, by Jan. 31. If you plan to file early, it’s best that you make sure you’ve received all income statements before filing.

Image: hand_document

Your tax filing status can affect the amount of tax you owe. Learn about how to choose your tax filing status.

2. You missed claiming a credit or deduction you were eligible to receive

There are a number of credits and above-the-line deductions (ones you don’t have to itemize to take) that could help you lower your tax bill. If you are eligible for one and don’t claim it, you could be leaving money on the table. Filing an amended tax return could allow you to claim that money.

For example, if you paid college tuition during the tax year, you could be eligible for the American opportunity tax credit or the lifetime learning credit. If you want to claim your educational credits after you’ve filed your 1040, you’ll have to file an amendment.

3. Your parents want to claim you as a dependent on their taxes

Your parents want to claim you as a dependent on their taxes. But when you did your taxes, you failed to check the box on the 1040 that says you could be claimed as a dependent on someone’s else’s taxes, and now your parents can’t claim you as a dependent on their taxes.

If your parents could claim you on their taxes — and you agree they should — you’ll need to file an amendment.

4. Your employer made a mistake on your W-2 and had to send you a corrected document

People make mistakes, and so do companies. If the payroll department made an error on your W-2, it’ll have to send you a corrected form. When you receive the new W-2 C it will display the previously reported information next to the correct information to let you know what needs to be corrected. If the numbers changed and you already filed your return using the incorrect W-2, you will have to file an amendment.

5. You forgot to report income from a side gig

You worked a side gig but had no idea you had to report the extra income on your federal income tax return. You went ahead and filed your taxes, but later you received a CP2000 notice from the IRS alerting you that the information the IRS has on file doesn’t match what you reported on your tax return. In this case, you may have underpaid your taxes.

The notice shows the side gig income that you forgot to report. If the information in the CP2000 is correct, you don’t need to amend your return unless you have additional income, credits or expenses to report.

In this case, you agree with the notice but also had expenses that need to be deducted. So you’ll have to file an amendment.

To deduct your side-gig expenses, fill out a Schedule C for the side gig and file a 1040-X. You will also want to write “CP2000” on top of your amended return, attach it to the response form and then mail it to the IRS.

6. You used the wrong filing status

You got married in November. Because you were single for most of the year, your spouse assumed you would have to file separate returns using a single filing status. But the IRS considers you as married for the entire year as long as you wed by Dec. 31 of the tax year you’re filing for.

You will need to file an amendment to change your filing status. And, considering the tax advantages of being married — such as a higher standard deduction — you may actually be eager to file that amended return.

7. Someone else claimed your child on their tax return

You go to file your taxes and the IRS rejects your return because your ex (or someone else) has already claimed your child as a dependent.

Of course, you and your ex can’t both claim your child as a dependent if you want to qualify for certain tax breaks like the child tax credit. You may have a divorce decree or custody agreement in place, but for IRS purposes the parent who gets to claim the child as a dependent is typically the parent with whom the child lived for more than half the year and who provided more than half of the child’s support.

If you and your ex can agree that you should be the one to claim your child as a dependent, your ex will need to file an amended return to remove your child as a dependent. If the two of you can’t agree, the IRS will apply tie-breaker rules when deciding who will get to claim the child.

Is there a time limit for amending a return?

The IRS advises that you generally must file Form 1040-X to amend a return within three years from the date you filed your original tax return, or within two years of the date you paid the tax, whichever is later. Be sure to enter the year of the return you are amending at the top of Form 1040-X.

If you miss the deadline, the IRS may not let you amend your return — and you could miss out on any deductions, credits or tax benefits the amendment would allow you to claim. However, time periods for claiming a refund are suspended for a period when the IRS determines a taxpayer to be financially disabled because of a physical ailment or mental impairment.

How can I file an amended return?

To amend a tax return, you must file Form 1040-X. The IRS began accepting electronically filed 1040-X forms for tax year 2020. For previous tax years, you’ll still have to mail a paper 1040-X to amend your return.

Here are some tips if you have to file a paper 1040-X.

• Be sure to sign and date the form.
• Attach any required forms that support your amendment to the 1040-X. Check out the 1040-X instructions for details on how to assemble your return because forms must go in a specific order when you attach them.
• Make sure you explain the reason for amending the return on Form 1040-X, Part III.
• If you use software or an online service to prepare your 1040-X, you’ll have to print a copy to mail. It’s probably a good idea to print a second copy to keep for your records.

If you find you need to amend multiple years of returns, you’ll need to file a separate 1040-X for each year. You can check the status of your amended return online through the IRS Where’s My Amended Return tool.

Bottom line

Filing an amended tax return is like getting a second chance at any tax benefits you might have missed out on the first time. Of course, it may also mean you end up owing more tax.

Being aware of the situations that can trigger an amended return could help you avoid making a mistake you’ll have to correct later.

Relevant sources: IRS: Amended Returns and Form 1040X | IRS Form 1040 | IRS: Understanding Your CP2000 Notice | Publication 4491, VITA/TCE Training Guide | IRS: Qualifying Child of More than One Person | IRS Publication 501: Dependents, Standard Deduction and Filing Information | IRS Publication 17, Your Federal Income Tax For Individuals | IRS FAQs – Amended Returns | IRS Instructions for Form 1040X | IRS: Where’s My Amended Return? | About Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship) | Amended U.S. Individual Income Tax Return | Form 1040-X, Amended U.S. Individual Income Tax Return, Frequently Asked Questions | About Form W-2 C, Corrected Wage and Tax Statements

This article was fact-checked by our editors and CPA candidate Janet Murphy, senior product specialist with Credit Karma.

For many Americans, a 9-to-5 job pays the bills, but for some, it’s additional income — like investments or side hustles — that helps them get ahead.

Many people have multiple sources of income. Whether it’s a second job, freelance work or interest and dividends from investments and financial accounts, if you have more than one source of income, you’ll want to report it correctly on your federal tax return.

Here are some key things to know about filing taxes when you have multiple sources of income.

• Types of income that could be taxable
• Hustling on the side? You’re self-employed
• Reporting your self-employment income on your tax return
• Expenses offset self-employment income — and can lower your tax
• A word about self-employment tax
• Other multiple sources of income

Types of income that could be taxable

So much can happen in a year. You can work a full-time job, then get laid off from that job, withdraw from your 401(k) retirement plan, receive unemployment compensation, and start a side hustle to help make ends meet.

Or you could make a smart investment and find yourself with a nice dividend check. Maybe you won big at the casino or rented out your home through a vacation app.

All of these are examples of how you can have multiple streams of income within the same year. But is all that income taxable? For the most part, yes.

Whether your income is earned or unearned, it can be taxable. Some examples of taxable income include:

• Wages from an employer
• Money you earned freelancing
• Rental income from leasing your personal property
• Unemployment compensation
• Interest or dividends from investments
• Canceled debts, unless they are canceled as part of a bankruptcy

The type of income you have will influence how you report it to the IRS, and how the IRS taxes that income.

For many Americans, a side hustle is their largest source of extra income, so let’s take a look at that first.

Hustling on the side? You’re self-employed

If you work in a trade or business as a sole proprietor, independent contractor or partner, the IRS considers you self-employed, whether you do the work full time or just part time.  That includes your side hustle. The tax rules for self-employment income are different than the rules that apply to your W-2 earnings.

In many cases, the income you make from self-employment gets reported on a 1099-MISC.

1099-MISC income statement

These year-end statements are for people who worked for a company, but not as an employee of the company. The 1099-MISC also reports rental payments, services (including parts and materials), prizes and awards.

If you’re not sure whether the self-employment income you received is taxable or nontaxable, check out Publication 525, Taxable and Nontaxable Income. You can also review the filing requirements listed in the Form 1040 instructions (PDF).

Reporting your self-employment income on your tax return

With multiple streams of income, you could end up receiving a lot of 1099-MISC income statements and other types of income forms in the mail at the end of the year.

What should you do with all the statements? Can you group all the 1099 statements together onto one Schedule C? Or should you file a Schedule C for each different 1099?

Depending on the nature of the different businesses, you may have to file two or more Schedule C forms. You possibly could group activities together on the same Schedule C form if there are some similarities in the activities.

For example: You sell pet toys online and drive an Uber on the weekends. Those are two distinctly different types of business activities, so they can’t be grouped together into one Schedule C. But say you had an online pet toy store, and you also had a dog-sitting service. You could possibly group these into one Schedule C because both activities are related to running a pet service business.

The IRS will generally allow you to group like businesses if you can support the grouping with facts and circumstances.

The Schedule C form shows whether you made a profit or loss. To fill out the Schedule C you’ll need to know how much income you made from the side hustle. This is where you’ll input certain income from your 1099-MISC, along with reporting any additional cash payments and checks that you may have received.

Expenses offset self-employment income — and can lower your tax

Earning an income from your side hustle doesn’t always mean you made a profit — especially when you factor in the expenses that came along with trying to run your side business. As the saying goes, you have to spend money to make money. Self-employed people typically have to spend money on their businesses.

After you put your income on the Schedule C, calculate the expenses that came along with running your side hustle. You can only deduct expenses that you incurred to run your side business. The expenses must be ordinary and necessary for you to conduct your business. By entering in your expenses on the Schedule C you’ll either generate a profit or loss that will be reported on the 1040.

If you made a profit, then you must add that amount to your taxable income. If you had a loss, you can subtract it from your taxable income. You only pay taxes on your business or side hustle profits.

Here are some of the most common expenses claimed on the Schedule C:

• Supplies
• Car and truck expenses (operation and maintenance)
• Depreciation
• Legal and professional services
• Taxes
• Utilities
• Insurance
• Home office

However, there are about 30 expense categories on the Schedule C.

A word about self-employment tax

Until now, we’ve been talking about income tax that you must pay on the income you receive as a self-employed individual. But self-employed people must also pay something call “self-employment tax.”

Everyone who works is required to pay Social Security and Medicare taxes. When you earn a salary, your employer withholds this tax for you. When you’re self-employed, you have to make your own contributions to Social Security and Medicare.

The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for Social Security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).

It’s important to remember, however, that self-employment income doesn’t get reported as “other income” on Line 21 of Schedule 1. It should be reported as “business income” on Line 12 of your 1040, with Schedule C or Schedule C-EZ attached. If you fail to calculate the self-employment tax on your extra income, the IRS could possibly alert you by letter that you owe additional taxes and penalties for failure to pay.

It’s important you report side hustle income correctly so you can pay your portion of self-employment tax.

Other multiple sources of income

What about other sources of income you might need to report to the IRS? How do you file them?

Examples of other sources of income are interest received from your checking or savings account, dividends from stocks, Social Security benefits or unemployment compensation. All these types of income will be reported on the new, shorter 1040 and on the new Schedule 1 Additional Income and Adjustments to Income.

Bottom line

Having multiple streams of income doesn’t have to complicate your taxes when you’re ready to file. But it’s crucial that you keep up with the various income statements you may receive — and that you keep good records of all the extra income coming in and expenses going out. Staying organized and knowing how to report your multiple sources of income are key to filing your tax return correctly.

A senior product specialist with Credit Karma, Janet Murphy is a CPA candidate with more than a decade in the tax industry. She’s worked as a tax analyst, tax product development manager and tax accountant. She has accounting degrees and certifications from Clemson University and the U.S. Career Institute. You can find her on LinkedIn.

This article was fact-checked by our editors and Jennifer Samuel, senior product specialist for Credit Karma. It has been updated for the 2020 tax year.

• What’s a filing status and why does it matter?
• Who can file as head of household?
• Who counts as a qualifying person for head-of-household purposes?
• What are some tax benefits of filing as head of household?
• What if I filed single when I could have filed as head of household?

What’s a filing status and why does it matter?

A filing status is a designation that tells the IRS some very important information about you, including whether you’re married, single or widowed, and whether you have dependent children. Your filing status helps determine your tax rate, what tax bracket you end up in, the amount of tax you owe, your standard deduction, eligibility for certain credits and even if you have to file at all.

Choosing the wrong filing status could leave you paying far more in taxes than you should. Here are the filing statuses the IRS recognizes.

Image: txupdatehoh

Who can file as head of household?

You can see from the above chart that filing status is generally tied to marital status, with married taxpayers having the option to file jointly or separately. Generally, people who have never been married, or who are legally divorced or separated at the end of a tax year, should use the single filing status.

But some unmarried taxpayers can use the head-of-household filing status. But you must meet certain requirements, including the following:

• You were unmarried or considered unmarried on the last day of the tax year.
• You paid more than half the cost of maintaining a household for the tax year.
• You had at least one qualifying person living with you for more than half the tax year (except for temporary absences, like attending college). Note: Qualifying dependent parents don’t have to live with you.

Here’s an example of how the qualifying cost of maintaining a home works: Your 18-year-old son lived with you and paid half of all the household bills. You can’t claim the head-of-household filing status. You can only claim head of household if you paid more than half, which would be 51% or more of your total household expenses.

Once you’ve established that you paid more than 50% of the expenses of your home, you must also meet all the requirements for your qualifying person that you claim as your dependent.

Who counts as a qualifying person for head-of-household purposes?

To file head of household, you must have a qualifying dependent. A qualifying person may be …

• Your qualifying child, like a son, daughter or grandchild who lived with you more than half the year and meets certain other criteria. (More on this in a moment.)
• Your dependent mother or father.
• A qualifying relative other than a parent (like a sibling or grandparent) who lived with you more than half the year and is your dependent. (More on this, too.)

Your qualifying person can’t be someone else’s qualifying person who enables them to file as head of household for the same tax year.

Qualifying child tests

To be considered as qualifying, a child must meet five tests.

1. Relationship test — To meet the relationship test, a child must be your child, stepchild, foster child, grandchild, sibling, step- or half-sibling, niece, nephew, or adopted child.
2. Age test — Your child must be younger than you, and younger than 19 at the end of the year. If your child is in college, they can still be considered as qualifying (until age 24). And if your child is permanently disabled, they qualify regardless of their age.
3. Residency test — To meet this test, your child must have lived with you for more than half the year. Some situations may qualify as exceptions, or reasons why your child didn’t live with you, that will still allow you to claim them.
4. Support test — Your child didn’t provide more than half of their own support for the year.
5. Joint return test — If your qualifying child is married, they can’t have filed a joint return with their spouse unless it was to claim a refund of income tax withheld or estimated tax they paid.

Qualifying relative test

What if you don’t have a child to qualify as your dependent, but you have a family member who lived with you more than half the year?

A qualifying relative can be any age and can be considered as a dependent who helps you qualify for the head-of-household filing status by meeting four tests.

1. Not-a-qualifying-child test — The relative isn’t your qualifying child or the qualifying child of another taxpayer. For example, you have an adult child who doesn’t meet the age test to be a qualifying child, but they may meet the other tests to be considered a qualifying relative.
2. Gross income test — Your qualifying relative can’t have gross income of a certain amount for the tax  year. Income includes money, property and services that aren’t exempt from tax. There are exceptions and this limit may change from year to year.
3. Member-of-household or relationship test — Anyone who lives with you all year as a member of your household can meet this test, even if they’re not related to you. If the person is your child, stepchild or foster child, they may also meet this test, even if they didn’t live with you all year. Same goes for other relatives: grandchildren; siblings, half-siblings or step-siblings; parents, in-laws, step-parents and grandparents; nieces and nephews; and aunts and uncles.
4. Support test — Generally, you must have provided more than half of your qualifying person’s total support during the year for them to meet this test.

What are some tax benefits of filing as head of household?

Filing as head of household has advantages over the single or married-filing-separately statuses, including the following:

• A lower tax rate — Generally, the income thresholds for head of household filers are higher than for single filers. That means more of your income can be taxed at a lower rate if you can file as head of household. For example, for 2019 single filers moved from the 10% tax rate (the lowest) to 12% when their income exceeded $9,700. For head of household filers, that threshold was $13,850.
• A higher standard deduction — The standard deduction for head of household is $18,650 for 2020 versus $12,400 for single filers. Like all tax deductions, the standard deduction helps reduce your taxable income, which in turn may reduce your tax liability.
• Access to certain credits — For example, by filing as head of household, you can claim the child tax credit for your qualifying child.

What if I filed single when I could have filed as head of household?

If you filed a recent federal return as single when you qualified to use the head-of-household status, all is not lost.

You can likely correct your filing status for the tax year — and claim any tax advantages you missed — by filing an amended tax return. There’s a place on Form 1040-X where you can change your filing status. Just be aware that if you change your filing status to head of household, you’ll need to include the name of any qualifying child who is not your dependent. There’s also a section where you’ll need to explain why you’re filing the amended return.

Bottom line

As you can see, filing as head of household has its advantages — if you’re a single person and can meet the tests and qualifications. It’s certainly not as restrictive as the married-filing-separately status, which limits certain credits and deductions. By filing as head of household, you may be able to claim deductions and credits not available to single filers or those married filing separately.

Still not sure you qualify to file as head of household? The IRS offers an interactive assistant to help you choose a filing status.

Relevant sources: IRS: Publication 17 — Your Federal Income Tax | IRS: SOI Tax Stats — Individual Income Tax Returns Publication 1304 (Complete Report) | IRS: Choosing the Correct Filing Status | IRS: What Is My Filing Status? | IRS: Publication 501 (2019), Dependents, Standard Deduction and Filing Information

Jennifer Samuel, senior tax product specialist for Credit Karma, has more than a decade of experience in the tax preparation industry, including work as a tax analyst and tax preparation professional. She holds a bachelor’s degree in accounting from Saint Leo University. You can find her on LinkedIn.

This article was fact-checked by our editors and Rachel Weatherly, tax product specialist with Credit Karma.

On the list of phone calls no one wants to get, a call from the IRS is probably near the top.

That fear is what scammers are counting on when they call thousands of Americans every year, claiming to be IRS representatives and demanding bogus tax payments.

In fact, since 2013 more than 2.3 million reports of IRS impersonation scam calls have poured into the office of the Treasury Inspector General for Tax Administration. And more than 13,500 victims have reported losses of more than $67 million.

Actually, the IRS says it will never call a taxpayer out of the blue to demand payment before mailing an actual tax bill. So if you get an IRS collections call but haven’t received a tax bill, that’s probably a red flag.

Here are some other things to know …

• The younger you are, the harder you may fall
• Recognizing a bogus phone call
• Other types of IRS scams
• What to do if you get a scam call

The younger you are, the harder you may fall

IRS tax collection phone scams are alive, well and continuing to con American taxpayers. And while you may think seniors would be the likeliest victims, research by the Better Business Bureau shows that people ages 25 to 34 are actually more prone to fall for such scams — and more likely to lose money in them.

According to the BBB, 69% of victims are younger than 45, and 78% hold a college or graduate degree.

What’s more, research by communications tech company First Orion shows that while young people receive fewer scam calls than those in other generations, they’re more likely to give personal information like their Social Security numbers or credit card information to phone scammers.

In addition to potentially losing money, you could expose yourself to identity theft by giving out your personal information. Or, crooks could use your Social Security number and other personal info to file a fraudulent tax return and steal any tax refund you’re owed.

Recognizing a bogus phone call

If you’re new to filing taxes, or you aren’t sure whether you might owe the IRS any money, it is especially important to know the signs of an IRS tax scam. A lack of confidence can make you more vulnerable.

According to the IRS, a tax collection scam typically works like this:

• You receive a phone call from someone claiming to be an officer of the U.S. Treasury, IRS or other government agency. It may initially be a recording threatening you with arrest if you don’t call back.
• The caller is demanding, aggressive and hostile. The person will insist you immediately pay a considerable sum of money for “back taxes.”
• The caller states or implies that if you don’t pay immediately over the phone you will be arrested.
• In addition to a credit card or bank account, the person may demand payment through cash, a wire transfer, prepaid debit card or gift card.

But the IRS doesn’t work that way. Many of the things scammers do are actions the IRS would never take, including:

• Calling to demand immediate payment without first mailing you a bill
• Demanding a specific payment method
• Threatening to have you arrested if you don’t pay
• Demanding payment without giving you the opportunity to question or appeal the amount you may owe
• Asking for payment information like a debit or credit card number over the phone

The IRS initiates all collections requests by U.S. mail. So if you get a phone call without having first received a bill, be skeptical of the call.

Other types of IRS scams

Calling on the phone is not the only way these con artists attempt to contact you. Sometimes the scammers use phishing — contacting you by email — in an attempt to commit tax fraud.

With phishing, a scammer may send what looks like a legitimate email from a recognizable company. The goal is to get you to provide your personal and financial information in a reply.

But the IRS never sends unsolicited emails to taxpayers, so be wary of unexpected emails from anyone claiming to from be the IRS. If the email asks for personal information, states something about your tax account or refers to taxes associated with a large investment, inheritance or lottery — those are also indicators of a scam.

If you get a scam email, don’t reply to it. Do not open any attachments or click on any links. Doing this can infect your computer or mobile phone with a virus. The IRS advises you to forward phishing emails to phishing@irs.gov.

What to do if you get a scam call

If you do get one of those fake IRS collection calls, the first thing you should do is write down the number on your caller ID, then immediately hang up without providing any information to the caller. Be aware that the scammer might have used technology to disguise their phone number to make it look like the call is from the IRS or another official agency.

If you know you don’t owe the IRS, you should report the scam to TIGTA through its online portal and to the Federal Trade Commission through its FTC Complaint Assistant. Make a note that your complaint is related to “IRS Telephone Scams.”

Not sure whether you actually owe any money? You can call the IRS directly at (800) 829-1040. An IRS representative can help you determine if you owe anything or are in the clear. You can also view your tax account online at IRS.gov. You’ll need to create an account if you don’t already have one. If you do have an existing account, you’ll be able to log in and see any balance you may owe. You’ll also be able to securely pay any balance online.

Bottom line

Crooks continue to use IRS tax scams to try to bilk Americans out of their money. Their aggressive, threatening tactics are intended to pressure you into acting before you have a chance to really evaluate the scammer’s claims and threats.

You can reduce your risk of falling for this kind of scam by never allowing someone to pressure you into a financial move over the phone. Always take time to think before acting. Research any request that involves giving up your money by phone or email.

Rachel Weatherly is a tax product specialist with Credit Karma. She studied accounting and finance at Western Carolina University and has also worked as a tax analyst. You can find her on LinkedIn.