April 15 is just around the corner.
But just because the tax deadline is near doesn’t mean you’re ready to file.
You may need more time to get your forms together. Or you may even be thinking about making changes to an older return.
Whatever the reason, it’s important to know about tax extensions, amended tax returns and which option is best for your unique tax situation.
What are tax extensions?
Tax extensions can provide some welcome relief to those not ready to file by the 2020 deadline. When you file an extension on your taxes, you have six extra months to complete and submit your return to the IRS, meaning your 2019 return won’t be due until October 15. Extensions can be filed electronically or by mail using Form 4868.
But while IRS tax extensions give you more time to file your return, they don’t extend the deadline on paying what you owe. Whatever money you owe the federal government must be paid on or before April 15. If you don’t, you’ll likely face a failure-to-pay penalty.
Important note: You must file your tax extension by the April filing deadline. Not doing so generally results in a penalty for not filing on time. Additionally, failure to get your extended return in by the six-month deadline (October) will likely result in more severe IRS penalties.
What are amended tax returns?
Unlike tax extensions, amended tax returns don’t give you extra time to submit a return. Instead, filing an amended tax return with the IRS allows you to make changes to a previously filed return, correcting mistakes or capitalizing on deductions you may have missed the first time around. Amended tax returns are typically filed using Form 1040X.
Currently, you are allowed to amend a previous return up to three years after the original filing date.
What are the reasons for filing an amended return?
Millions of taxpayers file amended returns each year—and for a variety of reasons.
Some of the more common reasons to file a Form 1040X with the IRS include:
1. Missed credit or tax deduction
One of the more popular reasons to file an IRS amended tax return is to seize on a missed deduction, something you may discover after combing through previous returns.
Overlooked tax deductions like charitable contributions can sometimes amount to a lower tax bill or even a sizable tax refund once you claim it on an amended return.
2. Corrected tax forms
Forms like W2s and 1099s are issued by employers, banks and investment firms each year, providing taxpayers the info needed to file with the IRS. Sometimes, however, these forms can contain incomplete information, requiring the institution to send corrected forms that may arrive well after you’ve filed your return.
When that happens, you’ll need to file an amended tax return to ensure your info matches IRS records.
3. Failure to report additional income
If you held a side job last year but neglected to report the income on a past tax return, you may receive a CP2000 notice from the IRS. This is alerting you that IRS records don’t match what you’ve reported—and that you likely underpaid your taxes on that year’s return.
If the CP2000 info is correct, you generally won’t need to file an amended return, as the IRS will usually calculate any additional tax you may owe.
4. Filing with wrong status
Say you got married late last year. But not realizing the IRS considers you married for the whole year (if made official by December 31), you and your spouse assumed you needed to file your returns separately, meaning you missed out on the higher standard deduction that goes with being married.
Filing an amended tax return with the IRS is the only way you can change your filing status and claim the tax breaks that come with it.
5. Tax rule changes
IRS clarifications and court rulings on existing tax rules can sometimes affect or open up tax break opportunities on past returns, incentivizing the need to file an amended tax return.
How to file an amended return
To file an amended tax return:
Collect the original return and all related documents. You will need this information to reference as you prepare your amended return.
Download the correct IRS forms. You can access tax forms for previous years on the IRS website.
Complete a current 1040X. The Amended U.S. Individual Income Tax Return is where you’ll enter new or updated information for the tax year in question.
Mail your amended return to the IRS. Currently, amended tax returns are only accepted by mail.
Where do I mail my amended tax return?
All 1040X amended tax returns must be mailed to the Internal Revenue Service Center corresponding to the state you live in. The IRS provides a list of addresses to choose from here.
Note: If you owe more money as a result of filing an amended tax return, be sure to include that additional payment along with your return. This can help minimize any interest or penalties you may incur, as you are technically making a late tax payment.
Where is my amended return?
The IRS Where’s My Amended Return? tool makes it easy to check on the status of an amended return, though it can take up to three weeks after you mail your 1040X for it to show up in their system. Once received, an amended tax return can take anywhere between 12-16 weeks to process.
If you’re expecting a tax refund after filing your amended return but haven’t received your money beyond the 16-week processing period, call the IRS directly at 1-866-464-2050.
Tax extensions vs. amended tax returns: which is best for me?
Need some extra time to file this year? Want to claim that tax break you missed on last year’s return?
Whether it’s filing an extension or amending a return, Liberty Tax® is here to help. Our tax prep pros take the time to analyze your unique tax situation and determine the option that works best for you.