If you find an error on a previous tax return, follow these steps to correct it: You may file an amended return, and you may also be due a larger refund due to a missed deduction. An amended return is the taxpayer´s opportunity to receive any unclaimed refund or to correct an instance of underpayment after it has been filed and the filing due date has passed.
Why file an amended return?
Even though most of the special tax benefits from COVID-19 relief expired at the end of 2021, you may still have time to take advantage of them by filing an amended return. You generally have three years after the filing deadline to do so, which means you can still amend your 2020, 2021, and 2022 returns.
Taxpayers often amend returns because amended forms may arrive later in the filing season or after the filing deadline. In addition, job changes, health problems, and other life events have tax consequences that taxpayers overlooked, but can result in modified returns. You may also find that after the filing deadline you qualify for the tax breaks you missed, which means you can amend your return to receive a refund.
How to file an amended return?
To correct a return, first gather the relevant documents. For example, if you didn´t report a portion of your income last year, you can include the missing amount. Then, use Form 1040-X to amend your return.
You can submit your amended return electronically or by mail, but experts suggest doing so electronically whenever possible. You can file an amended return for 2020, 2021, or 2022 electronically as long as you electronically filed the original return.
The IRS is increasingly supporting electronic routing and has the ability to track and monitor return changes and information mismatches faster than ever before. If you receive new information that doesn´t match your original filing and creates additional liability, the IRS will be knocking on your door with penalties and interest charges in hand, so it´s always best to anticipate their actions and take them into account.
What to expect when you modify a tax return?
You can file an amended tax return within three years from the date you filed your original return or within two years from the date you paid the taxes you owe, but the sooner the better.
“As soon as you discover the error, you need to take steps to correct it,” Evenstad says. “Penalties and interest charges add up every day, so the sooner the better to correct a mistake.” The IRS says it takes about four months to process amended returns, but keep in mind that it could take much longer.
If all is well, they should process those electronically filed amended returns within 16 weeks. That is the goal they set themselves; however, they also say that if there are more bugs or special circumstances, it could take longer. If that´s the case, the IRS has to contact the taxpayer and that could take years.
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