The Amended Federal Tax Return - IRS Form 1040X

Written by: Patricia Tokar, CPA • Edited by: Rebecca Scudder
Updated Feb 24, 2011

What should you do if you discover that you forgot to report income or to take a deduction on your federal tax return? What about that critical tax form that arrived a month after you filed your tax return? Or that credit you forgot to take? Filing an amended tax return is the answer.

Reasons to File A Federal Amended Tax Return

IRS Form 1040X is used to file an amended tax return. As the name implies, the purpose of this form is to correct or change an item on a tax return that has already been filed. With an amended tax return, you can:

Claim the First Time Home Buyers Credit (special rules apply)
Change your filing status
Add or remove a dependent
Report additional income
Claim additional adjustments or deductions
Claim overlooked tax credits
Change a preparation error, such as failure to use a favorable tax method, like capital gains tax or failure to calculate self-employment tax

Do I Have to File an Amended Return?

Technically, no, an amended return will not always be necessary. For errors involving omitting a standard income form such as Form W-2 (Wage income) or Form 1099-R (Retirement Income), the IRS will usually catch your error and send you a notice. For almost all errors involving failure to include a deduction or a tax credit, the IRS will not catch this and your only remedy is to file an amended tax return.

Although the IRS may catch your error, it is still strongly advisable to file an amended return as soon as possible after you discover an omission or other necessary correction. If you file an amended return before the deadline of the original return, you will avoid most, if not all, penalties and interest on the correction. Further, if you file a corrected return before the IRS catches your error and sends a notice, the IRS most likely will not charge a negligence penalty, although you will still owe interest on any taxes paid after the due date of the original return.

It can be up to two years before you receive a notice from the IRS that an error has been found and additional taxes have been calculated on your return. During this time period, an alarming amount of penalties and interest can accrue. It is far better to just file an amended return as soon as you realize that your tax return was incorrect.

How to Fill Out a Form 1040X

The top part of the federal Form 1040X is for your name(s), address, social security number(s), filing status, and the tax year you are amending. There is also a section for any changes in dependents.

The IRS recently updated Form 1040X and it is much simpler and has just one column. This column is used to report the corrected amounts only.

To get the amounts for the amended tax return, you must first prepare a new tax return using your corrected figures. If there are any new or corrected forms or schedules, you must also prepare these. Be sure to use the tax laws and tax rates that were in effect for the year that you are correcting.

The Form 1040X has a section for you to fill in the reason for filing the amended tax return. You should be brief and specific. For example, you might report that you received a late Form W-2 with gross income of $5000.00 and Federal withholding of $500.00 from the John Smith Corporation.

IRS Form 1040X

IRS Form 1040X instructions

Filing for the First Time Homebuyers Credit

A 2009 amended tax return can be filed to claim the First Time Homebuyers Credit for a home purchased in 2010. (The home must have a binding sales contract dated April 30 2010 or earlier AND the sale must be completed by Sept 30 2010.) For this credit, a 2010 Form 5405 would be filed with a 2009 Form 1040X. Since the tax laws have changed and can also be complex for claiming the credit on an amended return, it would be wise to consult with a tax accountant or CPA for claiming this credit with an amended tax return.

Consider claiming the First Time Homebuyers's Credit with an amended return against the prior year if your current year income is high enough to reduce your allowable credit. If your income was lower in the prior year, you may be eligible for a larger credit. It is worth checking to see which year brings the larger credit.

You may also consider filing to claim the credit with an amended 2009 return if there is an unavoidable delay in preparing your 2010 return and you want the credit as soon as possible.

Follow the instructions carefully, as the IRS has greatly increased the documentation that needs to be attached to the returns in order to claim the credit.

The IRS has issued a 2010 Form 5405 to be used to claim the First Time Homebuyers Credit on a 2009 or 2010 tax return

IRS 2010 Form 5405

Instructions for Form 5405

What to Attach to the Form 1040X

If you are reporting any changes in withholding, you should attach the Form W-2, 1099, or other form that shows the amount you are correcting.

You should also attach any new or changed forms or schedules. If you attach a corrected Form 1040, be sure to write “Amended” across the front of both pages of the 1040.

There are special rules and many documents required for the Form 5405 (First Time Homebuyer's Credit). See the form and instructions for the required attachments if you are filing a 1040X with a Form 5405.

When Should I File the Form 1040X?

If the amended tax return is being filed to claim an additional refund, you should wait until you receive your original refund to file the amended return. If you will owe additional tax, file as soon as possible.

For claiming refunds, an amended form must be filed within three years of the original due date of the return, or within two years of the payment of the tax, whichever is later. For example, to claim an additional refund on a 2007 tax return, the 1040X must generally be filed by April 15, 2011.

When to Use a Tax Accountant or Tax Attorney

If your correction involves taking an aggressive new tax position, a complex calculation, or anything requiring more than a simple correction, you would be well advised to consult with a tax accountant to prepare the amended return. If the correction is for a substantially under reported amount, or if it is for a controversial tax position, then you may even prefer to consult with a tax attorney.

Legal and IRS Required Notes

This article is not intended to be specific tax advice. It is intended as a general guideline only. Any specific advice should be sought from your tax professional.

CIRCULAR 230 DISCLOSURE: Pursuant to Treasury Department guidelines, any federal tax information contained in this article, or any attachment, does not constitute a formal tax opinion. Accordingly, any federal tax advice contained in this communication, or any attachment, is not intended or written to be used, and cannot be used, by you or any other recipient for the purpose of avoiding penalties

Smash_led Feb 10, 2012 8:07 PM

RE: The Amended Federal Tax Return - IRS Form 1040X

I did taxes for a friend like 2 weeks ago. The day after I filed them she told me that she received some documents in the mail for an IRA that she rolled over into a 401K. When I amend the taxes, none of the figures change whatsoever. Do I still need to file the amended return?

Mandyweimann Feb 6, 2012 9:02 AM

I have already filed my 2011 tax return and was already excepted. I claimed my three kids as dependents, and then realized that my boyfriend which files head of household should have claimed them. I have amended my return taking them off my taxes. How long does it take until my boyfriend can claim them with out any issues?

Patricia Tokar, CPA Feb 1, 2012 6:30 PM

You only pay income taxes once on the pension withdrawal. The amount of Federal income tax withholding from the check was just an estimate and may or may not be the correct amount. When you file the 1040X, be sure to take credit for the withholding. If you were under 59-1/2 when you took the withdrawal, also be sure to check the list of exceptions for the early withdrawal penalty. If your husband was unemployed and you used the money to pay health insurance or you paid large medical bills, some or all of the withdrawal might not be subject to the 10% (or 25%) penalty. Other exceptions, such as using the funds for college expenses, or if he lost his job after age 55, might apply. Just be sure to check them before you pay the penalty ... see the instructions for Form 5329. See Circular 230 disclosure above.

Patricia Tokar, CPA Feb 1, 2012 6:20 PM

In theory, the IRS will almost always catch this error and send you a notice that they have adjusted your refund. You would then get an additional refund check or you would receive a bill for the additional amount due, depending on whether you miscalculated more or less than the actual. You can watch for the notices in the mail, or you can call the IRS to find out where you are in the process. In some cases, an error of this nature will cause your e-filed return to "hang" until the issue is resolved. In other cases, the IRS will send a partial refund and then a letter notice asking you to agree or disagree with their adjustment. Either way, you should eventually get a mailed letter notice that you need to resolve. You may still want to file a 1040X if you know there will be an additional amount due - sending the 1040X and paying the tax before the due date of the return will reduce or eliminate penalty and interest. You may also want to file the 1040X if you are owed a larger refund, but already got the original refund amount and have not received any correspondence from the IRS after 30-60 days. Personally, I'd call the IRS first to find out what the status is, as this may speed things up considerably. See Circular 230 disclaimer in the article

Dallas Jan 30, 2012 1:49 PM

If I miscalculated my federal withholding only, do I have to file a 1040X Amended Return or will the IRS computers fix the calculation error?

amanda Jan 29, 2012 6:41 PM

We received 2 1099-R forms after our taxes were already filed. I know we have amend our tax return now. Taxes were taken out of the money when the withdrawl was made.. Do we have to pay taxes on it again? My husband was laid off so we did not roll the money over into anything else. We used it to survive...

Patricia Tokar, CPA Jan 17, 2012 2:57 AM

Shacra, the error in the address should not affect a direct deposit. However you should still correct your address with the IRS. The address on your latest tax return will become your official address with the IRS and this will be used for sending any notices, corrections, questions, and any additional refunds from the IRS. You may be able to correct the address simply by calling the IRS - I would try this first as it will be the fastest method.

Shacra Jan 14, 2012 4:26 AM

I made an error on the number part of my address...Im getting my return direct deposited...Does this error in my address constitute the need for an amendment?

Patricia Tokar, CPA Nov 17, 2011 9:41 PM

Melanie, I can only give a general reply as I don't have your specific information. First, note that if the notice was from the original married filing separately returns, then the refiling probably corrected some or all of the balance owing on the notice. You likely don't owe the $404.89. Second, the preparer is obligated to provide you with a copy of your tax return when it is completed, and they could be subject to sanctions from the IRS if they don't provide a copy of the return to you. While it is not a "requirement", he/she should also have provided clear instructions showing whether you were getting a refund or had a balance due. While it would be considered poor practice to not give you these clear instructions, as long as you were provided a copy of the tax return, it would likely not be considered "illegal."

melanie Oct 27, 2011 7:40 PM

My accountan filed us married, filing seperately initially, and then refiled federal taxes as married, filing jointly. We received a bill from the IRS for $404.89. When I called the IRS, they said the maoney owed was based on filing seperately. My question is, it illegal for the accountant not to inform you of taxes owed?

Patricia Tokar, CPA Sep 2, 2011 2:00 PM

Paul Malicki,

I can only give you general information on your pension distributions, note that this should not be considered specific advice:

First, yes, you can request that your pension plan administrator stop withholding taxes on your pension checks.

You don't give much info regarding your age, type of plan, etc. so I'll assume you are over 59-1/2 and receiving a regular defined benefit pension.

Regardless, the answer to ignoring a 1099-R would be "NO." The fact that there is Federal withholding from your pension distribution indicates to me that at least part of the distribution is considered taxable income. "Post tax amounts" should not be showing as taxable on the 1099-R. You are likely correct that the amounts showing as taxable are your employer's pre-tax contributions on your behalf.

Read the boxes carefully on the 1099-R: Note for 2010, the Box 1 shows the TOTAL amount you received and Box 2 shows only the TAXABLE amount. You should only be reporting as income on your 1040 the amount in box 2. Now look further to Box 5: this shows the amount of your own post tax contributions that were distributed to you in 2010. (Box 2 has already been adjusted for this amount) Do these numbers seem correct to you? If not, you should contact the pension plan administrator to discuss possible errors.

The amount of tax that you pay on the pension distribution depends on your age and the total income and total deductions on your tax return. The amount of tax withheld from the pension checks is only an estimate. You should be able to change the withholding to more closely match the actual tax that you will owe on the distribution.

I'm not sure how you calculated the year 2034 as the start of taxable benefits.

Hope this helps. I do have another Bright Hub article on pensions - Pension Taxes and Retirement Checks - Are Pension Checks Taxable http://www.brighthub.com/money/personal-finance/articles/33115.aspx This may help further.

Paul Malicki Aug 31, 2011 3:23 PM

I already paid taxed?

Can I choose not to have federal witholding taken out of my pension check because it was already post tax money. Why do I get a 1099-R form and can I just ignore it because my pension contrbution was post taxed from my payroll checks. Or is this the money my employer contributed to my pension and paid no taxes on and now I have too. But I thought that's why their taking an exra $84.94 for and I didn't have to start paying taxes till 2034? THANK YOU, for any help you can give me. Paul Malicki

Patricia Tokar, CPA Mar 17, 2011 11:09 PM

Interest on Refunds

Matt,
The IRS will pay interest on a tax overpayment if the amount is not refunded within 45 days after the due date of the return, or if the return is filed after the due date (such as with an amended return), within 45 days after filing the return.

Reference Sec. 6611(a) and 6611(e)

As a side note, I'm not completely clear about what you forms are filing, but be aware that the IRS is heavily monitoring all of the first time home buyers credit requests. The IRS is requesting extra documentation and taking unusually long processing times with this credit. Most likely due to the high amount of fraud that was initially associated with the credit.

Also reference legal and IRS required notes section above.

Matt Mar 17, 2011 7:34 PM

When will IRS issue refund

I filed my taxes February 14 with form for IRS to take $500 credit on 2008 home buyer credit I received. My return is "delayed". What is the time period for IRS to issue my refund? Do they have to pay P&I? What federal Statute governs this issue?

Patricia Tokar, CPA Feb 26, 2011 2:03 PM

Statute of Limitations for Audit

Norma,

The statute of limitations starts on the LATER of the date the return was filed or the due date of the return. In the case of a 2010 Form 1040 series return, the statutes relating to time periods for an audit or assessment of additional tax start on April 18, 2011, even if you filed in February 2011.

Reference IRS code 6501(a) and 6501(b)(1). Also Code of Federal Regulations Sec. 301.6501(a)-1.

Please refer to Circular 230 Disclosure above.

Norma Feb 24, 2011 6:24 PM

Amended return

If a return is amended in february 26 and is audited, can and will the IRS extend the audit to the april 15 2011 return ?

I am considering taking a credit,

Thanks

Patricia Tokar, CPA Feb 17, 2011 1:23 PM

1099-R Received after filing

Paul, I am unable to give specific advice, but I can answer your question in general:

First, the 1099-R is not usually attached if there was no Federal withholding. Use the explanation section on the form 1040X to show why you are filing the 1040X.

Second, if box 2a of the 1099-R shows $0.00 and Box 7 shows code G (direct transfer), then this has already been reported as a non-taxable distribution to the IRS. It should have been reported as such on the original 1040 return, but the omission may not generate a notice. For the purpose of avoiding any possible IRS notices, though, a 1040X would be the best way to correct it.

If the 1099-R does not have box 2a as $0.00, OR 2a is blank and box 2b is checked, OR Box 7 does not have a code G, then a 1040X should be filed.

Paul Feb 16, 2011 1:01 AM

1040x

received a 1099-r after i filed, just wondering if i need to attach it to form 1040x even though it was a rollover and no tax was withheld?or if i even have to file 1040x since it didnt cause any change.

peppe Dec 25, 2010 5:40 AM

Great article.
federal tax return

Patricia Tokar, CPA Feb 11, 2010 3:49 PM

Printing 1040X

Lary, I just got on the IRS site and downloaded and printed the 1040X. Try again, maybe there was a glitch in the transmission. Here is the link again to the form: http://www.irs.gov/pub/irs-pdf/f1040x.pdf. The form was recently updated by the IRS.
You might also try saving the form to your computer and then printing from that rather than printing directly from the IRS site.

Hope this helps.

LARY Feb 11, 2010 1:25 PM

1040X--AMENDED RETURN

WHY AM I HAVING TROUBLE PRINTING OUT A 1040X IRS AMENDED RETURNS? I HAD NO PROBLEMS WITH OTHER FORMS.