Congress sets the laws that change the current and future rules around taxes. But some of these changes can also retroactively affect taxes from previous filings. You might be wondering how to file an amended return to take advantage of these changes and whether you should.
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Have you ever filed your tax return and realized after the fact that you made a mistake or found out about new information that would change your return? You probably sat back and immediately asked yourself, "Can I redo my taxes?"
If you've been in this situation, you aren't alone. This is the process for filing an amended tax return and the tax breaks you may be able to take advantage of when you do.
You should file an amended return if you need to:
Don't underestimate the benefits of filing an amended return, either. By making sure your tax return is accurate, you can maximize your refund or lower what you owe. You'll also reduce the risk of receiving a notice or IRS audit in the future.
Recent tax changes include the following:
Many tax changes take affect each year that can lead to amending a tax return, including changes to the Child Tax Credit, Credit for Other Dependents, Charitable contribution limit, Earned Income Tax Credit, income tax brackets, and more.
You pay income and capital gains taxes on any income earned or gains received, respectively. To lower this overall tax liability, Congress has created several tax breaks to entice taxpayers to make certain desirable actions. In doing so, you're able to reduce your tax liability. If you decide to file an amended return, make sure you have a clear understanding of the tax changes, extensions, and credits.
Some of the tax changes that went into effect in 2018 include:
Extension of tax breaks in 2022 include:
The following have expired beginning with the 2018 tax year:
While most of these changes passed into law at the end of 2017, the majority went into effect in 2018. Due to the impermanent nature of the tax reform bill, all of these changes are set to revert to 2017 law after 2025 with the exception of the corporate tax rate. This change is not set to expire. The rate is 21%, down from 35% seen in 2017 prior to the law passing.
Finally, keep in mind that not every state adopted the new federal tax policies. Some states, like California, Texas, Minnesota, North Carolina, South Carolina, and New Hampshire, opted to not change their own laws to be more favorable to residents.
To proceed with preparing and filing your amended return, all you need to do is file Form 1040-X, Amended Tax Return, along with the corrected or additional documents you didn't file with your original return. This will amend your return and give you an accurate picture of your tax situation. Federal returns can now be amended by electronically filing them, but only beginning with the 2019 tax year (the first year this option was available).
The IRS requires that you file an amended return with a claim for refund within three years of the day you filed your original return, or within two years of the day you paid outstanding tax, whichever is later. If you file a return before the original due date of the return (regardless of extensions), the IRS treats it as though you filed it on the due date. Tax withholding from sources such as a W-2 is deemed to be tax paid on the due date.
If you experienced changes related to any of the items above that have occurred since tax reform went into effect, you should file amended returns as soon as possible to correct any errors or oversights.
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