Most taxpayers who suddenly realize there’s been a rather glaring mistake of omission or commission on an income tax return probably feel a gut-wrenching klong. But mistakes can be fixed, and sometimes there are reasons other than slip-ups to amend returns.
Reasons for Amended Tax Returns
There are numerous circumstances that trigger amendments. A few typical ones are:
- Failure to claim the Earned Income Credit or Child Tax Credit
- Finding a forgotten W-2 or 1099
- Overlooking a substantial itemized deduction on a Schedule A
- Realizing a different filing status could have been more beneficial
- Claiming deductions or credits that were not legitimate
- Entering figures for income, deductions or other tax data incorrectly in the return
- Finding out about a retroactive change in the tax law that could be beneficial
The various consequences could mean a bigger refund, a smaller tax bill or worst of all, an increased tax bill. But it could also mean nothing will change from a tax dollar perspective one way or the other. Doing the calculations on the IRS 1040X will ferret out the truth of the situation.
It’s Best to be Proactive With Federal Income Tax Return Amendments
It is usually a good idea to amend any federal income tax return as soon as possible for a number of reasons, among them that an anticipated refund may be delayed or the IRS may send some undesirable notices about interest charges and tax penalties. Any tax documents a taxpayer receives from banks, employers, stock brokers, etc., are also reported to the IRS, and it does watch for discrepancies.