- Form 1040X may be completed by taxpayers who originally file a personal income tax return. Taxpayers must always use Form 1040X even if correcting a Form 1040 you file early and the deadline has not passed. A Form 1040X is generally only valid if you file it within three years of the original filing deadline.
- In general, Form 1040X may be used to correct any error or omission on a taxpayer's individual tax return. However, you should not file a Form 1040X if the IRS has already identified and corrected the errors. If the IRS assesses an additional tax liability, you must follow the relevant audit procedures to challenge its position.
- Filing Form 1040X does not require the taxpayer to prepare a new Form 1040. Since eligibility to claim certain credits and deductions directly relates to the amount of income you report, a single correction can result in changes throughout the entire tax return. For example, reporting additional interest income increases your modified adjusted gross income and may disqualify the taxpayer from claiming a student loan interest deduction.
- When you file a 1040X to reduce taxable income, the IRS may owe you a refund check. However, when the form is used to report additional income, the IRS will increase your tax liability and may assess late payment penalties and interest.
- The Internal Revenue Code limits the amount of time the IRS has to audit a tax return and assess additional tax to three years from the original filing deadline. An IRS examination may also result in the assessment of penalties and interest on the increased tax liability. Filing Form 1040X, however, extends the statute of limitations, resetting the period from the day the form is filed.
previous post