How To File An Amended Federal Tax Return
Filing an amended tax return can be a daunting task. It certainly isn't the simplest thing. In fact the IRS website says to expect the task to take you 3.5 hours. Depending on how many amended returns you need to file, this can take a long time. I have seven to file and so far have spent about 10 hours on them. I am not done yet though.
The first thing to do is gather all the information that you need. You need your old return, form 1040X, and any new information that is causing you to file your amended return. If you don't have a copy of your old return, you can request one from the IRS or the state. It shouldn't take long to receive.
Reasons why you might need to file an amended return will vary, but make sure you state the reasons accurately on form 1040X. Be as clear as possible to try to avoid having them look into it further. You want to draw as little attention to yourself as possible when dealing with the IRS, so make sure you answer every question correctly, to the best of your knowledge.
When you fill out the form it will ask you for information from your tax return for that year. It will then ask you for any changes and finally the corrected amount. Any changes you make will probably create a trickle down affect, creating more changes. For us we had a change in our income. This created a change in our tax owed, our child tax credit and our additional child tax credit. Be careful that you find all of the places that need to be changed.
Once you have it completed you will need to mail it to the IRS, you cannot file this form online. Your tax software might help you fill out the form, but it will ask you to print it and mail it in yourself. Include any payment owed with your amended return.
Once you file an amended federal return you have to file an amended state return as well. The IRS will send a notice to your state that you amended your return. If you file it yourself and take care of it before they contact you, the penalties are less, at least in my state. On the federal return there is no way to figure out penalties, so I am assuming that they bill you after the return is filed. For state returns the forms for amending a return are different for each year, so make sure you print the right ones.
Unfortunately I am learning all to well exactly how to file amended returns. It would have been much better to have done it correctly in the beginning. We honestly didn't know we were doing it wrong at the time though, hindsight is 20/20 right? It is much better to fix these returns myself though, than wait for the IRS to figure out my mistakes. If you have an amended return to file, be proactive, be honest and get it over with as soon as possible.