There are plenty of common tax-filing errors to avoid. When you discover an error, alarm bells should go off. Will the IRS send someone to arrest you for preparing a false return?
Never fear: Form 1040X is designed for just such a circumstance. And lest you think you are the only person who made that mistake, relax.
According to the IRS, you’re in good company. They are expecting almost six million (5,729,672) amended tax returns to be filed. Since they are expecting in the neighborhood of 152,688,737 individual returns to be filed, the amendments amount to almost 4%. See, you are not alone!
Here’s everything you need to know about filing a Form 1040X. For help with other issues, check out our complete Tax Guide.
Form 1040X Basics
Form 1040X is labeled “Amended U.S. Individual Income Tax Return.” It is a two-page form. Its purpose is to amend an individual tax return (1040, 1040A, or 1040EZ, typically) that was previously filed. You can make corrections to these submitted returns, or change amounts on the returns that the IRS may have adjusted after submission. The possible outcomes of amending are that you may get an additional refund, have to repay part of the refund that you already received, or pay additional tax.
Note that Form 1040X cannot be e-filed. It has to be mailed with supporting return, schedules, forms, and source documents (like a W-2, for example). In order to prepare an amended return, you need a copy of your original return, any new source documents or other information that will change (such as filing status or dependents), and your Form 1040X.
When to File
The IRS advises that if you are due a refund on your original return, wait until you receive the refund before submitting an amended return. That way, you know that the IRS has finished processing your return, and the amendment will be processed after the original return.
Generally speaking, you have three years from the date you filed your original return to file a 1040X to claim a refund. You can file the 1040X within two years from the date you paid the tax, if that date is later. Review the 1040X Instructions for special rules that apply to certain claims.
How to File
Page one of Form 1040X has a header section with information similar to the regular 1040. The first thing you need to do is check the box indicating which tax year you are amending. If you need to amend more than one year’s return, do a separate 1040X for each year.
Then, you enter your name and social security number (and the same data for your spouse, if filing jointly). Enter your current address and daytime phone number. Then enter your filing status, whether you are changing it or not. Also, check the box to indicate if your all members of your household had minimal essential health coverage.
Next, you come to the section where most of the changes usually occur. The left-most column has descriptions and instructions under the following general headings:
- Income and Deductions
- Tax Liability
- Refund or Amount You Owe
The right three columns are for numbers:
- Column A: Original Amount
- Column B: Net Change
- Column C: Correct Amount
Start by putting the amounts from your original return in Column A. Then, put the increase or (decrease) in Column B. Next, combine the amounts in Columns A and B, and put the result in Column C. If there is no amount in Column B, then the figure from Column A is repeated in Column C. Show negative numbers in parentheses, for example, -234 would be (234).
So, the header might look something like this:
Example Form 1040X
Income and Deductions
As an example, let’s assume the original 2016 return of a single taxpayer with no dependents showed Adjusted Gross Income (line 37 of Form 1040) of $23,000, and his newly discovered W-2 shows $1,500 in Box 1.
In the “Income and Deductions” section of Form 1040X on Line 1, he would put $23,000 in Column A and $1,500 in Column B. The amount in Column C would be $23,000 + $1,500 = $24,500.
Suppose that the original return had withholding of $2,100 shown on Form 1040, line 64, and that the new W-2 shows withholding of $300 in Box 2. Then on Form 1040X, line 12, in the “Payments” section, he would put $2,100 in Column A and $300 in Column B. Column C would show $2,100 + $300 = $2,400.
That’s not the end of the story because our taxpayer would have a standard deduction of $6,300 and a personal exemption of $4,050. These amounts go in the “Income and Deductions” section, on lines 2 and 4, respectively, in both Columns A and C. These are IRS numbers for the taxpayer’s filing status and personal exemption and do not change, so nothing goes in Column B.
Now, we need to follow the instructions on line 3, subtract the amounts on line 2 from the amounts on line 1 in each column, and put the results on line 3 in each column. This action reduces adjusted gross income by the amount of the standard deduction.
Then, we do something similar with the personal exemption. We follow the directions on line 5 and subtract line 4 from line 3 in each column, and put the results on line 5. This gives us taxable income as found on the original return and as amended, the difference being the $1,500 from the new W-2.
Having arrived at the original and amended taxable income amounts, we now enter the tax on line 6 in the “Tax Liability” section. We enter the tax of $1,438 on the original return into Column A. We go to the 2016 Tax Table in the 1040 Instructions and turn to page 80. In the section labeled “14,000,” we find the tax bracket $14,150 to $14,200. In the column labeled “Single” (our taxpayer’s filing status), we find the tax amount of $1,663, which we put on line 6, Column C, on the 1040X. The difference between those two numbers – $1,438 and $1,663 – is $225, which goes in Column B. Since, in this case, we have no credits for line 7, our number for line 6 are repeated on line 8. Similarly, we have no other taxes, so our numbers are again repeated on line 11: in columns A, B, C, we have $1438, $225, $1663, respectively.
This section of the 1040X looks like this:
We are done with the Tax Liability section, and we can move on to the “Payments” section, where we previously saw that we would put the withholding on the original return, and the new withholding on the new W-2, which we totaled on line 12, Column C.
Because our taxpayer is under 25, he was not eligible for the Earned Income Tax Credit. No dependents results in no Child Tax Credit and not being a student means no education credit. He also made no estimated tax payments, so lines 13, 14, 15 are blank, as is line 16, since he did not file for an extension. So, on line 17, we add lines 12-15 in Column C and line 16. Our total is $2,400.
Refund or Amount You Owe
In the “Refund or Amount You Owe” section of the 1040X, we finally find out if we have to repay part of the refund that we already received. Or, perhaps, we’ll get an additional refund.
On line 18, we enter the refund amount we previously received, $662 in this case. That amount is the difference between Column A, lines 12 and 11. We subtract that amount from the new withholding amount (line 12C) and enter the result ($1,738) on line 19.
Do you feel the tension rising as we get near the moment of truth?
Now, we compare that amount to the amount on line 11C (amended tax liability). Since the liability ($1,663) is less than the figure on line 19 ($1,738), we subtract and put the “additional amount overpaid” ($75) on line 21, then enter the amount again on line 22. We’re getting a refund!
Explanation of Changes
Now let’s exercise the other side of our brains and explain to the IRS exactly what it is that we are doing. We do this on page 2 in Part III. We need to explain every change. (Do it simply, the IRS has a short attention span.)
First, make an overview statement explaining why we are amending. Write something like, “Amending to add W-2 income not initially reported.” Then, explain the details:
- Lines 1,3,5: Adjusted gross income and taxable income increased by $1500.
- Lines 6,11: Tax and total tax increased by $225.
- Line 13: Withholding increased by $300.
- Line 21: Additional overpayment of $75
- Line 22: Amount to be refunded: $75.
Sign, Date, Assemble, and Mail
Ah, now we are done, right? Alas, not quite. We need to sign and date the 1040X. We also need to assemble the things we have to submit with the 1040X.
You should include a new, amended 1040, and mark it “As Amended” at the top of each page. If there were any new forms or schedules, you would include those. And, include a copy of the W-2 that necessitated this amendment.
Wondering where to mail this assemblage? Look in the 1040X instructions, page 14, “Where to File.” Find your state on the left and the corresponding IRS address on the right.
We only covered one scenario, amending to add additional income. You might also amend to change filing status, add another dependent, or claim a credit you forgot. Mark your new filing status in the header section, and add (or delete) dependents on page 2, Part I, Exemptions.
For example, let’s assume that your ex-spouse released the exemption for your son to you for 2016, but you did not know this until after you had filed your 2016 return. You would go to page 2, Part I, Exemptions.
On line 24, list your exemption (and your spouse’s if MFJ) on the original return. On line 25, add your dependent(s), the net change of one (Column B) and the correct number of one (Column C). On line 28, you put the total exemptions on the original return, the net change, and the correct total in Columns A, B, and C, respectively. On line 29, you multiply the amount of an exemption for 2016 ($4,050) times the numbers on line 28, for each of the three columns. Transfer these totals to line 4 on page 1, and work through the rest of the calculations.
If you qualified for a new credit, the new credit would go on Page 1, line 15, with the appropriate box checked. For example, if you added a dependent and that child qualified you for the Child Tax Credit, you would mark the box labeled “Schedule 8812,” and put the amount on line 15. Then you would need to include the revised 8812 with your 1040X. See, with a little patience, it does all fit together.
Amending a previously filed tax return is nothing to be ashamed of or fearful about. It happens a few million times every tax season. Things get misplaced, arrive late, are forgotten, are corrected, or you read about a credit for which you qualify after you file.
Filing an amendment is not trivial, but if you approach it systematically, it is not overwhelming either. Nevertheless, when it is finally done and sent on its way, you will heave a sigh of relief. And remember, you do not have to amend a return because of mathematical errors; the IRS will find them and correct them.