IRS Form 1040-X | How to File an Amended Tax Return

A Penny Pinchers Guide to Personal Finance

12 Mar 202208:36

EducationalLearning

32 Likes 10 Comments

TLDRBradford from Peninsula to Personal Finance explains the importance of filing an amended tax return with the IRS Form 1040x, even for simple mistakes, to avoid hefty fines. He guides viewers through the process, starting with filling out personal details, selecting the correct filing status, and entering the adjusted gross income and deductions. He emphasizes the need to calculate the new tax liability and compare it with the original return, detailing how to account for any overpayment or additional amount owed. Bradford also covers how to report changes in tax credits, payments, and request a refund or extension if necessary. He concludes with a reminder to provide a clear explanation for the amendment and to sign the form, ensuring viewers are equipped with the knowledge to correct any tax filing errors.

Takeaways

📝 **Amending a Tax Return**: It's important to file an amended tax return if there are errors or changes in your original tax return, even if the IRS might correct simple mistakes on their own.
🚨 **Consequences of Errors**: Ignoring tax errors can lead to significant fines and fees, so it's better to correct them proactively.
💻 **Tax Prep Software or CPA**: If you used tax preparation software or a CPA, they can assist you in filing an amended return by providing the correct information.
📄 **Form 1040X**: The IRS Form 1040X is used for amending tax returns from 2019, 2020, or 2021. For earlier years, the appropriate version must be obtained from the IRS website.
🔢 **Transcribing Information**: Column A of Form 1040X requires transcribing information from your original Form 1040, with corrections made in Column C.
🤔 **Adjusted Gross Income**: Ensure that any changes in income, such as unreported capital gains, are correctly reflected in the amended return.
📊 **Deductions and Tax Liability**: Itemized or standard deductions should be accurately reported, and tax liability recalculated based on the corrected information.
💹 **Capital Gains**: If you made capital gains that were not initially reported, these need to be included in your amended return to avoid penalties.
💰 **Payments and Refunds**: Accurately report any tax payments made, including those withheld from W-2s, and calculate any refund owed or additional amount due.
🔲 **Non-Applicable Sections**: If certain sections like non-refundable credits or other taxes are not relevant to your situation, they can be left blank or marked as zero.
✍️ **Explanation of Changes**: Provide a clear and concise explanation for each change made in the amended return, using plain English.

Q & A

What is the primary reason for filing an amended tax return?
-The primary reason for filing an amended tax return is to correct errors or make changes to your original tax return, such as simple miscalculations or missing required schedules like a late W2C.
What happens if the IRS finds a simple math mistake on your tax return?
-The IRS may fix the mistake on your behalf without requiring you to file an amended return. However, it's not worth leaving it up to chance, as even innocent mistakes can lead to fines and fees if not corrected.
How can you file an amended return if you used tax prep software or a CPA?
-You should provide the tax prep software or CPA with your correct information, and they will fill out and submit the 1040X form on your behalf.
What form do you need to use to amend a tax return from 2019, 2020, or 2021?
-You will need to use the IRS Form 1040X to amend a tax return from 2019, 2020, or 2021.
What should you do if you are amending a tax return for a year prior to 2019?
-You should visit the IRS website to obtain the appropriate version of the 1040X form for the tax year you are amending.
How is the process of filling out the 1040X form similar to the initial Form 1040?
-The process is similar in that you start by entering your personal information, such as your name, social security number, and filing status, and then proceed to input the corrected tax information.
What should you do if you discover you made a sale in December on some crypto and made a profit?
-You should report the profit from the crypto sale as part of your short-term capital gains tax, which is taxed the same as your income, and correct the adjusted gross income on the 1040X form.
How do you calculate the difference in taxes owed on the 1040X form?
-You calculate the difference in taxes owed by subtracting the tax amount from your original Form 1040 (Column A) from the corrected tax amount (Column C).
What is the purpose of Column A on the 1040X form?
-Column A is used to transcribe all the information from your original Form 1040 so that you can compare it with the corrected information you are providing in Column C.
What should you do if you are a sole proprietor and had to fill out a Schedule C?
-If you are a sole proprietor and had to fill out a Schedule C for qualified business deductions, you would include this information in the appropriate category on the 1040X form.
What is the final step in filing an amended tax return using Form 1040X?
-The final step is to sign and date the form, provide your occupation, and if applicable, fill out the section for a paid preparer. Then, submit the form to the IRS.

Outlines

00:00

📝 Filing an Amended Tax Return: When and How

In this paragraph, Bradford introduces the concept of filing an amended tax return and the importance of doing it correctly. He explains that even if the IRS might fix simple errors, it's crucial to file an amendment to avoid potential fines and fees. Bradford provides a step-by-step guide on using tax prep software or a CPA to file an amended return using Form 1040x. He also walks through the process of filling out the form, including entering personal information, amended return filing status, and making corrections to income, deductions, and tax liability. The paragraph emphasizes the seriousness of tax filing and the need for accuracy.

05:01

🔍 Completing IRS Form 1040x: A Detailed Walkthrough

This paragraph delves deeper into the specifics of completing IRS Form 1040x. Bradford discusses how to enter the correct information for each section of the form, including adjusted gross income, itemized deductions, standard deductions, and tax liability calculations. He also covers how to account for additional payments, such as those made with an extension request or initial return taxes, and how to calculate the refund or amount owed. The paragraph highlights the process of reporting changes, signing the form, and the option to donate to the Presidential Election Campaign Fund. It concludes with a reminder to check for any other potential tax filing mistakes before submitting the amended return.

Mindmap

Keywords

💡Amended Tax Return

An amended tax return is a document filed with the IRS to correct errors or make changes to a previously submitted tax return. It is a crucial process when there are discrepancies or updates to be made to an individual's original tax filing. In the video, the main theme revolves around guiding viewers on how to correctly file an amended tax return using IRS Form 1040x, emphasizing the importance of accuracy to avoid penalties.

💡IRS Form 1040x

IRS Form 1040x is the official form used by U.S. taxpayers to apply for a change or correction to a previously filed tax return. It is a key component in the process of amending a tax return. The video provides a step-by-step guide on filling out this form, highlighting its significance in ensuring tax returns are accurate and in compliance with IRS requirements.

💡Tax Prep Software

Tax prep software refers to computer programs designed to assist individuals in preparing their tax returns. These tools can simplify the process of filing taxes by guiding users through the necessary forms and calculations. In the context of the video, the presenter mentions that if a taxpayer used tax prep software or a CPA to file their original return, they could also use these services to help with filing an amended return.

💡CPA (Certified Public Accountant)

A CPA is a licensed professional in accounting who can provide a range of services, including the preparation and filing of tax returns. In the video, the CPA is suggested as a resource for taxpayers who may need assistance with complex tax situations or who prefer professional help in filing their amended returns.

💡Math Mistake

A math mistake refers to an error in calculations made on a tax return. The video clarifies that while the IRS may correct simple math errors without requiring an amended return, it is still advisable for taxpayers to file an amended return to ensure there are no miscalculations or oversights that could lead to penalties.

💡W2c

A W2c is an official tax document issued by employers to report corrections to information previously sent to the Social Security Administration and the IRS on a W2 form. In the video, receiving a late W2c is given as an example of a situation that might necessitate filing an amended tax return to reflect the corrected income information.

💡

💡Adjusted Gross Income (AGI)

Adjusted Gross Income (AGI) is a figure on a taxpayer's return that reflects their total income minus certain adjustments allowed by the IRS. It is a critical number used to calculate taxable income. In the video, the presenter demonstrates how to correctly report AGI on an amended return, emphasizing the need for accuracy to avoid underpayment penalties.

💡Itemized Deductions

Itemized deductions are specific expenses that taxpayers can choose to deduct from their AGI if they are greater than the standard deduction. The video explains that taxpayers should ensure their deductions are correctly annotated on the amended return, whether they are itemized or standard, to reflect the most accurate financial situation.

💡Tax Liability

Tax liability refers to the amount of tax that a person owes to the government based on their income and deductions. The video outlines how to calculate the correct tax liability on an amended return, using IRS tax tables or other methods, to ensure that the taxpayer is paying the correct amount of taxes.

💡Federal Income Tax Withheld

Federal income tax withheld is the amount of tax that an employer takes out of an employee's paycheck and sends to the IRS. This amount is reported on a taxpayer's W2 form. In the video, the presenter instructs viewers on how to report the correct amount of tax withheld on an amended return, which is important for accurately reflecting the taxpayer's pre-paid tax situation.

💡Refundable Credits

Refundable credits are tax credits that can be paid to a taxpayer even if they owe no tax or if the credit amount is greater than the tax owed. The video mentions that these credits are not applicable in the provided example, but they are an important aspect of tax returns for some taxpayers, as they can result in a tax refund.

Highlights

Reasons for filing an amended tax return include simple miscalculations or receiving a late W2c.

The IRS may correct simple math errors or missing schedules on your behalf, but it's safer to amend the return yourself.

Potential fines and fees can be substantial even for innocent mistakes, so it's crucial to correct them.

Using tax prep software or a CPA can simplify the process of filing an amended return by filling out Form 1040x on your behalf.

Form 1040x is used for amending tax returns from 2019, 2020, or 2021; older returns require a different version of the form.

The process of filling out Form 1040x is similar to the initial Form 1040, with columns for original and corrected information.

You must provide accurate personal information including name, social security number, and filing status.

Column A of Form 1040x requires transcribing information from the original Form 1040.

Column C is for entering the corrected information, with adjustments made to reflect changes.

Adjusted Gross Income and other figures need to be corrected if necessary, with explanations for the changes.

Itemized deductions or standard deductions must be accurately reported, with any changes clearly annotated.

The tax liability must be recalculated using IRS tax tables if the income was under $100,000.

Non-refundable credits and other taxes sections are usually not applicable for most people and can be left blank.

Total tax, payments, and credits need to be reconciled to determine the refund or amount owed.

If there's an overpayment, you can request a refund or apply it to next year's taxes or estimated tax payments.

Dependents and other credits like the Child Tax Credit or other Dependents Credit are only filled out if applicable.

Presidential Election Campaign Fund and other optional sections like this are filled out based on individual circumstances.

An explanation of changes is required when filing a 1040x, which should be provided in plain English.

Sign and date the form, and include your occupation; a paid preparer uses a separate section if applicable.

Transcripts

Browse More Related Video

When to File an Amended Return | CPA Explains

Sprintax US Tax Preparation STEP 7 - Е-file your federal tax return with Sprintax

What are Tax Write-Offs? Tax Deductions Explained by a CPA!

How to File Tax Returns as an international student | Tax Refund 2022

How to E-File your US nonresident federal tax return with Sprintax

The Basics of Tax Preparation

IRS Form 1040-X | How to File an Amended Tax Return

Takeaways

Q & A

What is the primary reason for filing an amended tax return?

What happens if the IRS finds a simple math mistake on your tax return?

How can you file an amended return if you used tax prep software or a CPA?

What form do you need to use to amend a tax return from 2019, 2020, or 2021?

What should you do if you are amending a tax return for a year prior to 2019?

How is the process of filling out the 1040X form similar to the initial Form 1040?

What should you do if you discover you made a sale in December on some crypto and made a profit?

How do you calculate the difference in taxes owed on the 1040X form?

What is the purpose of Column A on the 1040X form?

What should you do if you are a sole proprietor and had to fill out a Schedule C?

What is the final step in filing an amended tax return using Form 1040X?