When to File an Amended Return | CPA Explains
TLDRIn this informative video, CPA Crystal from Life Accounting clarifies when it is necessary to file an amended tax return. She dispels the myth that every mistake warrants an amendment and outlines specific scenarios where it is required, such as incorrect income reporting, unclaimed eligible credits, incorrect deductions, or wrong filing status. Crystal also addresses common misconceptions about when amendments are not needed, like simple math errors or missing documents, which the IRS typically corrects automatically. She provides practical tips for filing an amended return using Form 1040x, including the importance of timing, waiting for original refunds, and avoiding penalties by promptly paying any additional tax owed. The video concludes with advice on tracking the status of an amended return and emphasizes the importance of accuracy in tax filing.
Takeaways
- 😀 Everyone makes mistakes on their tax returns, and it doesn't make you a criminal.
- 📝 You should file an amended tax return if you entered your income incorrectly, did not claim eligible credits, claimed deductions incorrectly, or claimed the wrong filing status.
- 💰 If you start a side gig and need to report extra income, an amended return including a Schedule C for deductions may be necessary.
- 🤔 The IRS does not notify you of mistakes that could result in a refund; you need to be aware and amend your return if eligible.
- 👨👩👧👦 If someone else wrongly claimed your child on their tax return, both parties may need to file an amended return to correct the situation.
- 🎓 Students might be eligible for education tax credits, which could result in a refund if claimed via an amended return.
- 🏠 Business owners could recover significant amounts by amending their returns to include legitimate business deductions that were initially overlooked.
- 🤝 If you got married or divorced, your filing status for the year may need to be corrected on an amended return, regardless of the duration of the marital status.
- ✅ Simple math errors on your tax return are usually caught and corrected by the IRS automatically, so you don't need to file an amended return for those.
- 📅 For an amended return seeking a refund, it must be filed within three years from the original tax return's due date.
- 🔍 After filing an amended return, you can track its status online using the 'Where's My Amended Return' tool on the IRS website.
Q & A
What is the primary reason for filing an amended tax return?
-An amended tax return should be filed if you entered your income incorrectly, did not claim credits you're eligible for, claimed deductions incorrectly, or claimed the wrong filing status.
What happens if you receive a W-2 or 1099 after you've already filed your tax return?
-If you receive a W-2 or 1099 after filing your tax return, you may need to file an amended return to correct the income you reported.
Why might a person need to file an amended return for a side gig they started?
-A person might need to file an amended return if they started a side gig and did not report the extra income on their tax return, requiring them to include a Schedule C to deduct related expenses.
What is one common mistake that could result in owing the IRS money?
-A common mistake is not claiming credits you're eligible for, such as the American Opportunity Tax Credit or Lifetime Learning Credit, which could result in a large refund.
What is the IRS's stance on simple mathematical mistakes on a tax return?
-Simple mathematical mistakes are usually caught by the IRS when the return is processed, and the IRS automatically corrects these errors, so there's no need for the taxpayer to file an amended return.
What should you do if you forgot to attach a W-2 or other tax document to your return?
-If you forgot to include a form or schedule with your return, the IRS will contact you if they need that information to process your return. You do not need to file an amended return in this case.
Which form should be used to file an amended individual tax return?
-Form 1040X should be used to file an amended individual tax return.
Within how many years of the original due date should you file for a refund if you're amending a return?
-You should file Form 1040X for a refund within three years of the original due date of the return.
What should you do if you're expecting a refund from your original return before filing an amended return?
-Wait to receive your refund from the original return before filing an amended return to avoid confusion at the IRS.
How long can it take for an amended return to be processed by the IRS?
-Amended returns can take up to 16 weeks to process.
How can you track the status of your amended return?
-You can track the status of your amended return using the 'Where's My Amended Return' feature on the IRS website after a few weeks have passed since mailing.
What is the advice for those who owe additional tax as a result of an amended return?
-If you owe additional tax as a result of an amended return, file Form 1040X and pay the taxes as soon as possible to avoid additional penalties and interest.
Outlines
😀 Understanding When to Amend Your Tax Return
The first paragraph introduces the topic of tax return mistakes and the necessity of filing an amended return. Crystal, a CPA, explains that while it's common to make errors, not all require correction. She outlines specific situations where an amended return is needed, such as incorrect income reporting due to late or incorrect W-2/1099 forms, failure to claim eligible credits, incorrect deductions, or wrong filing status. Examples include a side gig's income not reported, eligibility for education tax credits, business expenses omitted on a Schedule C, and incorrect personal use of a home for business purposes. The paragraph emphasizes the IRS's broad criteria for amending a return and provides reassurance that simple mistakes don't always necessitate an amendment.
📝 How to Correctly Amend Your Tax Return
The second paragraph discusses scenarios where an amended tax return is not required, such as mathematical errors that the IRS automatically corrects, or missing documents like a W-2. It also addresses what to do when a tax return is rejected, which typically involves correcting the specific errors rather than amending the return. The paragraph then provides five tips for filing an amended return: using Form 1040x, filing for a refund within three years of the original due date, waiting for the original refund before amending for an additional refund, paying any additional tax owed promptly, and tracking the status of the amended return online. It concludes with a reminder to like the video and an anticipation for the next video in the series.
Mindmap
Keywords
💡Tax Return
💡Amended Tax Return
💡IRS
💡W-2 and 1099
💡Credits
💡Deductions
💡Filing Status
💡Mathematical Mistakes
💡Refund
💡Penalties and Interest
💡Form 1040X
Highlights
Mistakes on tax returns are common and do not necessarily make you a tax evading criminal.
Not all tax return errors require filing an amended return.
Specific situations necessitate filing an amended tax return, which will be discussed in the video.
Crystal, a CPA, shares her expertise in tax preparation and wealth building.
An amended tax return may be needed if your income was reported incorrectly, such as after receiving a late W-2 or 1099.
If you did not claim eligible credits, such as the American Opportunity Tax Credit, you may need to amend your return to receive a refund.
Forgetting to include business expenses on a Schedule C can be rectified by filing an amended return to claim deductions and potentially receive a refund.
Filing with the wrong tax filing status, such as being married but assuming single status, requires an amended return.
Simple mathematical mistakes on tax returns are usually caught and corrected by the IRS automatically.
Forgetting to attach a W-2 or other tax document does not require an amended return; the IRS will contact you if needed.
If a tax return is rejected, correct the errors and resubmit rather than filing an amended return.
Form 1040x should be used to file an amended individual tax return, which is different from the original Form 1040.
Amended returns for a refund must be filed within three years of the original tax return's due date.
Wait to receive your original refund before filing an amended return to avoid confusion at the IRS.
If you owe additional tax due to an amended return, file Form 1040x and pay as soon as possible to avoid penalties and interest.
Track the status of your amended return online using the IRS 'Where's My Amended Return' tool after a few weeks.
Amended tax returns can take up to 16 weeks to process, so it's important to be patient and check the status periodically.
Transcripts
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