By: Jeff Skolnick, CPA, M.S. Taxation

One question that I run in to quite often is I made a mistake on my tax return and I know I’m entitled to more deductions, but is amending my return going to raise a red flag?

My answer to this question would be if you have the proper support to your change by all means, file an amended return.  This question of whether amended returns raise red flags has long been discussed by both taxpayers and tax professionals.  I have never seen any study that proves filing an amended return opens you to audit any more than filing any other return.  For purposes of this article I will concentrate on amended returns filed with the IRS.

Under what circumstances should I file an amended return?

Amended returns should be filed if you need to correct anything on a form previously filed with a taxing authority.  Corrections may include changes to income, deductions, credits, filing status or dependents.

How do I file an amended tax return?

An amended tax return is filed with the IRS Service center that processed your original return.  The amended form is Form 1040X which shows amounts originally reported under income, deduction, tax liability and payment categories.  This form will also show any changes that you are claiming.  The key to this is to properly document your changes in narrative form and to attach any backup.  An example would be that you are taking additional mortgage interest expense.  You would attach a copy of form 1098 received from a bank showing the additional interest.

Please keep in mind when filing an amended return to claim a refund of previously paid taxes, the return is due within three years after the date you filed your original return or within two years after the date you paid the tax, whichever is later.

Does filing an amended return extend the statute of limitations?

Generally filing an amended return does not extend the statute of limitations for an income tax return. The exception to this rule occurs if your amended return is received by the IRS within 60 days of when the statute would have expired. In that case the IRS has an additional 60 days to assess tax.  If, for example,  a taxpayer filed their 2015 return timely (April 15, 2016) and then filed an amended return which was received by the IRS on April 14, 2019, then the IRS would have 60 days to assess the taxpayer because the amended return was received with only 1 day remaining on the statute.

 Are there any reasons to file an amended return other than to correct errors?

The answer to this question is yes.  A perfect example of this would be a casualty loss (i.e. Hurricane Sandy in 2012).  Normally a casualty loss is reported in the year the casualty occurs.   however if you suffer a casualty loss due to a federally declared disaster that occurs in an area requiring public or individual assistance, then you can treat the loss as having occurred in the year immediately preceding the tax year in which it happened, and you can deduct the loss on your tax return or amended tax return for the year before

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