Amended Returns Prior Year Returns Pub 4012 – Tab M Pub 4491 – Part 9 – Lesson 34

Why Amend a Return Something not correctly reported on original return New/updated information received by taxpayer Should or could have used a different filing status Mistakes Omissions Generally because the taxpayer ask. NTTC Training - TY2016 2

For example… Received another (or corrected) income statement not reported on original return (W-2, 1099, ...) Claimed personal exemption deduction when someone else was entitled to claim it Claimed deductions or credits that should not have been claimed Did not claim deductions or credits that should have been claimed Examples New information Late W-2 or 1099 received, omitted from original return Changed information “Corrected” W-2 or 1099 Error Wrong filing status Filed single w/dependent and should have been head of household Claiming a dependent that should not have Did not claim a credit or did claim a credit that should or should not have NTTC Training - TY2016

Filing Status Change Couples who previously filed MFS, HH, Single, or QW may amend and file MFJ Up to three prior year returns Must have been legally married as of December 31 of the respective tax year Couples may NOT file MFS if they originally filed MFJ Same sex couples that filed single/HoH/QW May amend, but are not required to. NTTC Training - TY2016

Do Not Amend a Return Math errors – IRS will correct them Rarely happens using software IRS notifies taxpayer to provide missing schedules/forms taxpayer should respond as per notice NTTC Training - TY2016

Policy Counselors must have been certified for year being amended or prepared [need preparer and QR] Amended returns are prepared in TaxSlayer and paper filed with IRS Can prepare or amend returns for current and previous three years only NTTC Training - TY2016

Amended Returns Essentially, Form 1040X will be the taxpayer’s new tax return, changing their original return to include new information Whatever was last filed* is starting point Even if refund claimed has not yet been received Even if balance due has not yet been paid * or as last determined (e.g., IRS made adjustment) Taxpayer should complete the payment as shown on the original return NTTC Training - TY2016

Amended Returns Statute of Limitations Time within which to claim a refund Later of: 3 years from original due date or actual date filed if later 2 years from date the tax was paid State statute may differ Exceptions to these statute rules are out of scope The regular statute for 2012 ended April 15, 2016 (originally due 4/15/2013 plus 3 years) There are longer statutes for some items, such as claiming a loss on worthless securities or foreign tax credit Such taxpayers should be referred to a paid preparer NTTC Training - TY2016

Amended Returns Statute of Limitations Additional tax owing IRS barred by Statute of Limitation from assessing more tax 3 years from original due date or date filed if later Longer if fraud involved Can always voluntarily amend and pay more tax 3-year statute of limitation does not apply if return was never filed. NTTC Training - TY2016

Amending 2016 Return Example: Filed 2016 return, say in February 2017 Receive new or corrected 1099 form in March 2017 Wait until the IRS processes original (efiled) return before submitting an amended return Usually, 4 weeks is enough time to wait NTTC Training - TY2016

Interview Review previous return to be amended Review previous Intake/Interview sheet Verify amended return is needed Ask taxpayer for any changes or notifications made to return by IRS Confirm and note all items that need to be changed on Intake/Interview sheet The IRS generally communicates with the taxpayer with written notifications that are mailed. NTTC Training - TY2016

Amending a Return Form 1040X is not year-specific – TaxSlayer has form in each year’s software Must use TaxSlayer for the year for which amendment is to be made If amending 2013, must use 2013 TaxSlayer software In TaxSlayer, URL is the same and you choose which year you need NTTC Training - TY2016

Amending An Older Return With no carry-forward available for 2016, all returns for years 2013, 2014 or 2015 needing to be amended will need to be recreated as a starting point Choose the oldest year first, if amending more than one year Can short cut some entries as amended returns are not be e-filed NTTC Training - TY2016

Filing Status Change to MFJ Couples who previously filed MFS, HH, Single, or QW may amend and file MFJ Up to three prior year returns Must have been legally married as of December 31 of the respective tax year Same sex couples that filed single/HH/QW may amend, but do not have to amend to file as married NTTC Training - TY2016

When Re-creating Original Return What must be in “re-created” return All income, adjustments, etc. as on original Form 1040 as filed Use same forms e.g., use W-2 for wages, but may enter totals for ALL W-2s on original return (unless one of them needs correction) If 1040 lines are overridden, TaxSlayer may not make calculations properly Such as portion of social security benefit that is taxable NTTC Training - TY2016

When Re-creating Original Return If changing schedule or form, e.g., business income Sch C, re-create Sch C as it was in original return If expenses listed on page 2, again list expenses on page 2 This will be the surrogate for original return and is starting point for needed changes NTTC Training - TY2016

Re-creating Original Return Amended return can only be paper filed, so some input detail is not necessary Only need an EIN and Employer/ Institution Name in W-2s, 1099s, etc. Don’t need all detail in interest or dividend statements Don’t need all detail in charitable contributions NTTC Training - TY2016

Re-creating Original Return If IRS made change to original return, incorporate the change In retrieved original return, or In re-created return If previously amended return, that is starting point Use “last determined” return amounts NTTC Training - TY2016

TaxSlayer 1040X: Original Return Verify federal 1040 (page 1 and 2) and state returns match exactly to last determined return In TaxSlayer, review on screen Compare to last return filed When sure of starting point, proceed to amendment Not necessary to actually print this return NTTC Training - TY2016

1040-X Step By Step Process Pub 4012 pg M-1 Tip: Read carefully “How To Amend Your Return” which is the first item shown in TaxSlayer when choosing to amend Then work your way thru the next six items Add state amended return form, if applicable NTTC Training - TY2016

Making Changes Start with Basic Information Change of address, filing status or dependents? Does taxpayer now have social security number (was an ITIN used when originally filed)? NTTC Training - TY2016

Making Change to Filing Status Start with one spouse’s return, add the other spouse’s name, identification number, income, deductions, dependents, etc. Change filing status Explain why amending returns NTTC Training - TY2016

Making Changes Proceed through each change that is needed with a new entry or a change to an existing entry If corrected 1099-DIV was received, change Dividend Statement entries to match new form If new 1099-INT was received, add new entry on Interest Statement If new or revised W-2 or 1099-R was received, add or go to the form Remind participants Since not e-filed, can merely put in employer’s name and ein – don’t need the address – if more than one W-2 originally, you can enter totals for Boxes 1 thru 6 as totals using only one of the EINs Do need all amounts from the form input and any code letters NTTC Training - TY2016

Form 1040X – Page 2 Part I: Exemptions – shows changes made through Basic Information Part II: Presidential Election Campaign Fund Check box to elect $3 president campaign fund for taxpayer (or spouse) if taxpayer wants to and did not originally do so Explain to students: When to use Part I, Exemptions When to check boxes in Part II, Presidential Election Campaign Fund NTTC Training - TY2016

Part III – Explanation of Changes Identify why changes are being made (in a concise and easy to understand statement) “Received another W-2 after original return filed” “Changed filing status to Head of Household” Identify each changed item Copy and paste same explanation to state amended form No need to say that tax liability was changed as result of other changes Emphasize How to clearly explain the reasons for each change in Part III, Explanation of Changes Ask students to provide concise, easy-to-understand sample explanations for Part III of the amended return. NTTC Training - TY2016

Enter Date Enter current date at bottom of Page 2 of 1040X NTTC Training - TY2016

Quality Review Does column A of 1040X agree with last determined return Were needed changes made properly Did tax re-compute properly Create a “Note” of when and why amended return was prepared NTTC Training - TY2016

Printing Amended Return Print 1040X and any form or schedule that changed (two copies + one if needed for state) If changed itemized deductions: print Sch A If changed business income: print Sch C If changed education credit: print 8863 And so on Do not include new 1040 in print packet NTTC Training - TY2016

Assembling Amended Return Attach to front of 1040X Pg 1 any new or corrected taxpayer forms W-2, W- 2G, or 1099-R (if tax was withheld) Assemble other forms/schedules in “Attachment Sequence No” order behind 1040X pages 1 and 2 Attach other supporting documents at end, if appropriate NTTC Training - TY2016

Filing Amended Return Must be mailed – find IRS address in TaxSlayer or print Page 5 (“Where to File”) of 1040X instructions No cover letter required Taxpayer (and spouse if MFJ) must sign and date copy to be mailed Give taxpayer an exact copy for their records http://www.irs.gov/pub/irs-pdf/i1040x.pdf … url for 1040X Instructions NTTC Training - TY2016

If Amending Current Year Original e-filed return If taxpayer owed payment, complete payment of amount due as amended If original return had refund, it will process normally IRS will issue cash refund check, if any Okay to prepare amended return now, however taxpayer should not mail until four weeks after original return filed NTTC Training - TY2016

Amended 2016 Return If balance due: Taxpayer should file 1040X by April 18 or as soon as possible thereafter with payment to reduce interest charges, if any IRS will send a bill for interest DO NOT use/send any 1040-V that may show up now. Pay only from amount due on 1040X Page 1 Note: If amending 2016 before April 18, usually IRS will not pay interest Refunds cannot be direct deposited, IRS will issue a check IRS will pay interest if appropriate NTTC Training - TY2016

Amended 2015 or Earlier Return If refund: IRS will pay interest with refund if any is warranted Interest is taxable in year it is received Amended returns process in ~8 – 12 weeks NTTC Training - TY2016

Amending State Return Follow state rules for amending return as applicable Note: revised/new information could impact federal return but not state return or state return but not federal return, e.g.: Additional savings bond interest -OR- Additional municipal bond interest from another state NTTC Training - TY2016

Taxpayer Summary Amended Return Review amended return with taxpayer Show changes and result of changes Instruct taxpayer on what needs to be done to file return Sign, address envelope, add postage If payment required – include with return but do not “attach” it Date by which must be filed Attach means staple or tape NTTC Training - TY2016

Prior Year Returns Must be certified for year being prepared (both counselor and QR person) May prepare returns for three previous years No statute of limitation on amounts owed. Three year statute of limitation on refunds. NTTC Training - TY2016

Prior Year Returns Taxpayer must complete Intake/ Interview Sheet for each prior year Need prior year’s software, IRS reference materials, volunteer quality/tax alerts (from irs.gov) Follow regular policies and procedures NTTC Training - TY2016

Prior Year Returns Returns for 2013, 2014 and 2015 can be e-filed State may be different Check with ERO or Local Coordinator NTTC Training - TY2016

Amended or Prior Year Returns Comments? Questions? NTTC Training - TY2016