July 2, 2013 8:30 am

To Amend or Not to Amend: That Is the Question

Filing your tax return may not be end of the story for the year. You may want or need to amend a previously filed return. Decide whether you have to take this action.

Do file if

You’ll want to file if any of the following situations apply to you:

  • You discover you failed to report certain income. You’ll want to file an amended return as soon as possible to minimize interest and penalties (if applicable) on tax underpayments.
  • You failed to claim a deduction or tax credit to which you were entitled and that will lower your tax bill more than the cost of filing an amended return (the cost is your time or the fees you pay to a tax professional to file for you).
  • You want to claim a disaster loss that occurred this year on your prior year return. Do this if you need the immediate refund. But it probably pays to wait until you know your adjusted gross income for the current year so you can decide which year (this year or the prior year) will result in the larger deduction for your uninsured disaster loss.
  • You discover a bad debt or worthless security that you failed to write off. You have 7 years from the due date of the return for the year in which the debt or security became worthless to submit an amended return.
  • You failed to claim a moving expense deduction because you hadn’t completed the time test (39 weeks of work in the new location for employees, or 78 weeks for self-employed individuals).

Don’t file if

You don’t need to take any further action if you did certain things; the IRS computers likely will find the problem and the IRS will contact you. Don’t file if:

  • You made a math error on a return you prepared by hand that resulted in an underpayment. The IRS will send you a bill.
  • You failed to attach your W-2 form. If it is needed, the IRS will ask you for it.
  • You want to claim a net operating loss. You can choose to file amended returns for the carryback years, but you can instead file for a quick refund using Form 1045, which is simpler than filing amended returns.
  • You claimed a moving expense deduction for which you were not eligible. If you took the deduction because you expected to meet the time test, but failed to do so (and the reason for failure is not an IRS-acceptable excuse), you can avoid the need to file an amended return by simply adding the deducted amount as income to your current return.

What to do

If you file an amended return, use Form 1040X and send it to the same service center in which you submitted your original return. You must submit the return by mail; it cannot be filed electronically, even if your original return was filed in this manner.

The IRS now has a tool that you can use to track the status of your amended return at www.irs.gov/Filing/Individuals/Amended-Returns-(Form-1040-X)/Wheres-My-Amended-Return-1. You’ll have to wait 3 weeks from filing because you can use this tool.

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Factoids
FACT: 

In 2005, there were 20.6 million sole proprietors reporting $974.8 billion in gross receipts.

Source: Statistics of Income Bulletin Summer 2008

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