Many Americans have yet to submit their 2019 taxes, since the deadline to do so was pushed back until July 15, 2020 due to the COVID-19 crisis. But what if you already filed your 2019 tax return and realize you need to amend it?
Thankfully, there's good news in that regard, as the IRS just announced that it will soon start accepting amended 2019 tax returns electronically. Normally, amended tax returns can only be submitted on paper, so that's a welcome change that should lead to fewer errors and less work on a whole.
Why file an amended tax return?
There are several reasons why you may have to amend your tax return after submitting it. For one thing, if you get an updated W-2 or 1099 form, you'll need to amend your tax return to reflect that new information. Say your original W-2 overstates your income by $10,000. That's a huge tax liability for you, and so updating your tax return to reflect $10,000 less in income is essential. And on the flipside, you'll need to report a higher income if you initially stated a lower one due to receiving an incorrect tax form.
Furthermore, you may need to amend your tax return if you failed to report investment gains or losses, or any other income you collected during the tax year in question, such as interest from your savings account or dividend income in your brokerage account. Finally, if you failed to claim all of the tax credits and deductions you were eligible for, going back in and filing an amended tax return is the only way to lower your tax burden or potentially increase your refund amount.
What about amended tax returns from a previous year?
If you realize you need to amend a tax return that was filed prior to 2019, you may still have an opportunity to do so, as you get three years to submit an amendment. But if you're looking to update a 2017 or 2018 return, you'll still need to do so on paper. And if you owe money from one of those tax years, you'll need to prepare to pay it as quickly as possible to avoid additional interest and penalties.
To file a paper amendment, submit Form 1040-X to the IRS, and attach whatever documents relate to the changes you're making. You don't need to submit all of your old tax forms again; you just need to send in the forms that relate to the new information you're including. For example, if you're amending an old tax return because of an updated 1099 form, that 1099 is the only piece of documentation the IRS will need.
Meanwhile, you'll be able to amend your 2019 tax return electronically beginning this summer. Doing so will lower your chances of making a mistake on your amended filing, thereby eliminating one potential source of stress.