The Internal Revenue Service (IRS) has announced a game-changer: later this summer, taxpayers will be able to file Form 1040-X, Amended U.S Individual Income Tax Return, electronically.
Before this year, you could only amend your tax return by paper. At the best of times, that could mean a six-to-eight week wait for processing. And these are not the best of times. With a backlog of mail due to the pandemic, processing times were expected to be extremely lengthy.
Taxpayers and tax professionals have – for years – hoped that the IRS would allow for e-filing amended returns. According to the IRS, making the 1040-X an electronically filed form has been the agency’s goal for years.
Now, it’s really happening.
(Insert cheers and whistles here.)
“This new process is a major milestone for the IRS, and it follows hard work by people across the agency,” said IRS Commissioner Chuck Rettig. “E-filing has been one of the great success stories of the IRS, and more than 90 percent of taxpayers use it routinely. But the big hurdle that’s been remaining for years is to convert amended returns into this electronic process. Our teams have worked diligently to overcome the unique challenges related to the 1040-X, and we look forward to offering this new service this summer.”
Typically, about 3 million amended returns are filed by taxpayers each year. Most tax professionals expect that number to be higher due to the pandemic as taxpayers hope to change elections affecting dependents and refunds (a superseded return might be a better bet).
If you’re one of those folks rushing to file an amended return, use caution. If you’re making a change that is more than correcting a missed line item or righting a transposed number, take a breath first and think about the big picture. Merely filing an amended return may not be the best way to correct tax fraud or address a significant omission like a missed foreign compliance form. If your amended return carries potential consequences beyond payment due, check with a tax professional before mailing it in. You can’t un-ring that bell.
And you shouldn’t use an amended return to file for an injured spouse claim. Use Form 8379, Injured Spouse Allocation (downloads as a PDF) for that. You also shouldn’t use Form 1040-X to request a refund of penalties and interest or an addition to tax that you have already paid: you’ll make that request with Form 843, Claim for Refund and Request for Abatement (downloads as a PDF).
But the opportunity to correct mistakes quickly is a welcome change. Just don’t get too excited: you won’t be able to amend returns for multiple years just yet. Only tax year 2019 Forms 1040 and 1040-SR returns can be amended electronically when the program opens. Additions will be added in the future.
” Adding amended returns to the electronic family also complements our partnership with the tax software industry, which continues to work with us to provide better ways to help taxpayers,” said Ken Corbin, Commissioner of the IRS Wage and Investment division.
Of course, you can always opt to file your amended return by paper, but why would you want to? According to the IRS, filing electronically means that returns can be processed faster (true in my experience) while minimizing errors generally associated with manually completing the form (arguably true, if you remember to consider user input issues).
Despite the lag times in processing, the rules haven’t changed: if you choose to file an amended return (by paper or electronically), the regular statute of limitations rules apply. That means that filing an amended return does not extend the statute of limitations, or extend the time to pay.
If you electronically file Form 1040-X, you can still use the “Where’s My Amended Return?” online tool to check the status. You’ll need to provide your Tax ID number, your date of birth and your zip code.
(One quick sidebar: You may be used to seeing the amended return referred to as Form 1040X. I’m not just dash-happy: as of January 2020, the IRS advised that Form 1040X will be called Form 1040-X.)