Tax Tip: Amend Your Return

Editor's Note: This article is part of our 2013 Tax Tips series. Robert Flach is an expert with almost 40 years of experience as a tax professional and also blogs as The Wandering Tax Pro.

NEW YORK (MainStreet)—You filed your 2012 tax return and received your refund, or written your check. You put your copy and its documentation in the file cabinet with your prior year returns. You are finished with income taxes for another year.

But wait – you read about a deduction or credit in one of my TAX TIPS that you could have claimed to get you a bigger refund, or reduce the amount you had to pay. And you could have claimed it last year as well.

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Don’t worry - all is not lost. You can still take advantage of the deduction or credit on your 2012, or 2011 or 2010, tax return. While April 15 is the statutory deadline for filing your return, you have three years from the due date of the return, including extensions, - or two years from the date you paid the tax, whichever is later - to “amend” the return and get an additional refund.

On the other hand, let us say you receive a Form K-1 or a 1099 after you filed your tax return that reports additional income. You should file an amended return to report this additional income and pay the additional tax before the IRS catches the omission in its matching program and bills you for additional tax, penalty and interest.

Form 1040X, the Amended U.S. Individual Income Tax Return, should be used to correct the original Form 1040, or 1040A, for the year in question. The form has three columns. In Column A you state the income, deductions, exemptions, credits and tax payments as reported on the original return. In Column B you report the individual changes you are making. Column C reports the corrected figures. You must explain the changes you are making in a statement on the back of the Form 1040X.

Attach to the Form 1040X any IRS schedules or forms that change or are needed to claim the new item. If, for example, you are claiming additional or corrected itemized deductions attach a corrected Schedule A. Also attach a corrected Schedule A if the change reduces, or increases, your Adjusted Gross Income and as a result your deduction for medical or miscellaneous expenses is reduced or increased. And you should also attach copies of any other documentation that supports your changes.

If amending your return results in a refund of overpaid taxes, the IRS will also pay you interest on the amount of the refund, which, of course, must be reported as taxable income on your 2013 return. However, if you are filing an amended return to claim additional income and pay additional taxes the IRS will charge you interest on the tax due, which is not deductible.

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Do not file an amended return until the original return has made its way through the system. If there was a refund on the original return, wait until you have received and cashed your original refund check.

You can also file an amended state return to claim missed income, deductions or credits.

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