Amending a Tax Return: When and How

Mistakes happen, and sometimes you may need to correct or update a tax return after it’s been filed. Amending a tax return is the process of submitting a corrected version to the IRS to fix errors, report omitted information, or make other necessary changes. Here’s what you need to know:

When Should You Amend a Tax Return?

You should consider filing an amended return if you discover any of the following after submitting your original return:

  • Errors or Omissions: You left out income, claimed the wrong deduction, or made a mathematical or clerical mistake.

  • Changes in Filing Status: You need to change your filing status (e.g., from single to married filing jointly).

  • Adjustments to Credits or Deductions: You become eligible for a tax credit or deduction you did not claim, or you claimed one in error.

  • Reporting Additional Income: You discover income that should have been reported.

  • Foreign Tax Credit Changes: If your foreign tax situation changes—such as receiving a refund of foreign taxes, paying additional foreign taxes, or correcting an error—you may need to amend your return to claim or adjust the foreign tax credit. This ensures your U.S. tax liability accurately reflects your foreign tax payments or refunds.

How to Amend a Federal Tax Return

1. Use the Correct Form:

  • For individuals, use Form 1040-X (Amended U.S. Individual Income Tax Return) to correct Forms 1040, 1040-SR, or 1040-NR. Attach Form 1116 (Foreign Tax Credit) if amending for foreign tax credit.

  • For corporations, use Form 1120X and attach Form 1118 (Foreign Tax Credit—Corporations).

2. Provide Documentation:

  • Attach a clear statement explaining the reason for each change and identify the lines and amounts being changed.

  • For foreign tax credit amendments, include details of the original and revised foreign tax amounts, dates paid or accrued, amounts in foreign currency and exchange rates, and supporting documentation such as foreign tax payment receipts or foreign tax return copies.

3. File Electronically or by Mail:

  • Most individuals can file Form 1040-X electronically for recent tax years using IRS-approved tax software or through a tax professional.

  • If e-filing is not available, mail a paper Form 1040-X to the IRS address listed in the form instructions.

4. Special Deadlines for Foreign Tax Credit:

  • You have up to 10 years from the original due date of the return to claim a refund attributable to the foreign tax credit—much longer than the standard 3-year period for most other amendments.

  • If your foreign taxes decrease (e.g., you get a refund), notify the IRS within 180 days of the foreign tax redetermination.

5. Track Your Amended Return:

  • Amended returns can take up to 16 weeks to process and may take up to 3 weeks to appear in the IRS system after filing.

  • You can check the status of your amended return using the IRS “Where’s My Amended Return?” online tool.

Best Practices and Common Pitfalls

Best Practices:

  • Communicate clearly with your tax advisor about the purpose and scope of the amendment.

  • Gather all relevant facts and verify the accuracy of information before preparing the amended return.

  • File as soon as an error or omission is discovered to minimize interest and penalties.

  • Keep copies of all amended returns and supporting documents for at least three years (or longer for foreign tax credit claims).

  • Advise on potential penalties and whether adequate disclosure can help avoid them.

Common Pitfalls:

  • Submitting incomplete or inaccurate information.

  • Missing deadlines, which can affect your ability to claim a refund or increase penalties and interest.

  • Failing to provide sufficient disclosure for positions that may lack a reasonable basis.

  • Assuming an amended return will not be audited; all positions should be defensible.

  • Not advising the client of the potential consequences of amending (or not amending) a return.

Summary:

Amending a tax return allows you to correct errors, report omitted information, or make other necessary changes—including adjustments for the foreign tax credit. Use the correct form, provide clear explanations and documentation, file promptly, and keep thorough records. For foreign tax credit amendments, observe the special 10-year deadline and provide all required details. Following best practices and avoiding common pitfalls will help ensure your amended return is accurate, timely, and compliant with IRS requirements.

If you need help amending a tax return, our team is here to guide you through the process. Contact us.