Recent changes in tax regulations have created significant savings opportunities from some taxpayers. Now, taxpayers can claim new discounts on their 2018 tax returns. These extended federal tax breaks can save certain people big money in taxes, but you have to file an amended return to claim them if you paid taxes in 2018
Amended Return Basics
An amended return is exactly what it sounds like. It amends or adjusts a previously filed tax return. You have up to three years to file an amended return. If you owed taxes at the end of the year, you have two years from when you paid off the tax bill. An amended return can help you correct errors on your previous returns. You can use them to correct inaccuracies, claim missed deductions, and take advantage of credits. To file an amended return, you need to file a 1040X.
The IRS sets the annual filing date on April 15th. If you filed a return earlier in the year, April 15th is still considered the official filing date. However, filing an extension pushes your filing date back until October 15.
Possible Benefits of Amending Your 2018 Tax Return
Most people file amended returns to take advantage of missed tax savings.
Missed Deductions or Credits
Perhaps you missed some deductions or credits. This may occur as a result of preparing your current year’s tax return, or as a result of legislative changes like the tax extenders legislation that extended some tax breaks that expired in 2018. If either of these applies to you, you could stand to get a refund on your 2018 tax return if you file a 1040X.
Inaccuracies
You can also use amended returns to correct inaccuracies. If you notice a mistake, filing an amended return can help you avoid IRS penalties. The IRS will send you a tax bill that includes penalties if they catch it first.
Change In Filing Status
Another reason why you may want to amend your tax return is if you want to change your filing status. For example, if you filed as a single filer, but qualify for the head of household standard deduction, you could increase your standard deduction from $12,200 to $18,350. It could also lower your tax bracket. This can significantly lower your taxable income, and lower your tax rate allowing you to save more money on your taxes.
How to Use Form 1040X
To file a 1040X, you will need all of the pertinent information like your previously filed tax return and the documents supporting your amended return. When amending a tax return, keep in mind you aren’t amending the entire return, just the areas that need to be adjusted. You will need to fill out new corresponding forms and submit those along with your 1040X. A 1040X must be mailed to the IRS, as the IRS does not allow amended returns to be e-filed.
How Will an Amended Return Affect My Refund?
The effects of filing an amended return will depend on why you are amending your return. If you missed a deduction, you can claim it retroactively to reduce your taxable income. If you already paid your taxes, the IRS might reimburse you for overpaying. Likewise, if you missed a credit that you qualify for, if it is a refundable tax credit, then you will get the difference in the form of a refund.
Can I Owe More if I File an Amended Return?
Again, this will depend on why you are filing an amended return. Did you under-report your earnings? Change your filing status? Or discover a miscalculation? All of these things can result in your owing more than you previously thought.
You should try to catch your mistakes before the IRS does. If you catch the discrepancy first, you can fix it before it causes problems. The IRS could add penalties and interest to your bill. Sometimes, you’ll end up with a tax bill at the end of the year. You’re responsible for paying your bill, so make sure you don’t miss any due dates. You can pay your taxes online or through the mail. Learn more here.
Get Help with Your Amended Return Now
You don’t want to leave money on the table. Go back and claim your missed deductions with an amended return. Our team of experts can ensure that you don’t miss any savings. Recent legislation extended some tax breaks to 2018, and you could save a lot of money if you go back and take advantage. However, the Form 1040X filing process is complicated. You should consult with a tax expert to ensure you’re filing the amended return correctly. The experts at Shared Economy Tax can breakdown the entire process. Get started today with a one-on-one consultation with a tax pro. You can also sign up for our free tax tips newsletter using the form below.