7 times when you might need to file an amended tax return

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.

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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