John Bullis: Amended income tax returns

Since none of us are perfect, sometimes the original income tax return needs to be corrected. IRS calls it “amended.”

Perhaps you just made a mistake such as not claiming all of the itemized deductions you are entitled to. Form 1040X and the instructions for that form are on the IRS website.

One of the first items to enter is which year are you amending. Generally you can only amend returns that are within three years of the filing of the original return. So, if you filed your 2012 form 1040 April 10, 2013, you have until April 15, 2016, to file the amended return. Special rules apply when you had an extension of time to file and when you file before the required due date.

The taxpayer name(s) should be the same as on the Social Security card. Sometimes the original return did not show exactly that so an explanation would be helpful.

The form asks for your telephone number. That is not required but it is good to include it. If IRS can get a quick clarification or answer, it will save you and them time.

There is a special group within IRS that only handles the amended returns. They have been very busy and it takes a lot longer for an amended return to be processed than it does for an original return. The instructions indicate you should expect it to take up to 16 weeks for IRS to process your amended return. The more complete you can do the amended return, the better.

Which forms to attach to Form 1040X is a challenge. We make copies of the original pages that are involved and mark them “Original As Filed-Do Not Process.” Then we prepare the amended return and include the pages that are changed and mark them “Amended for Computation Only.” Even if the Alternative Minimum Tax does not apply on either the original or amended return, we include form 6251 just to show there is no AMT tax.

The statement or explanation is very important. Try to make it clear why the return is being amended and explain the changes in detail with references to the forms that are changed.

Then the two pages of form 1040X can be filled out. The first column to show the original amounts. The middle column to show the changes and the third column to display the corrected amounts.

Sometimes it is best to include a copy of the item that caused the amendment (corrected W-2 or Form 1099, etc.). The goal is to be so complete that the IRS person has everything in one package that allows them to process the return without delay.

An amended return that is done correctly does not increase the chances of an IRS audit. If the amount of the refund is less than $50, we suggest you save it, but not file it.

Did you hear? “Well, another day and I did not use algebra once.”

John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.