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

2. 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.
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3. 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
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4. 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.
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5. 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
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6. 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
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7. 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
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8. 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
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9. 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.
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10. 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
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11. 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.
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12. 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
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13. Amending An Older Return
With no carry-forward available for 2016, all returns for years 2013, 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
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14. 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
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15. 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
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16. 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
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17. 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
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18. 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
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19. 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
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20. 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
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21. 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)?
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22. 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
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23. 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
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24. 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
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25. 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.
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26. Enter Date Enter current date at bottom of Page 2 of 1040X
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27. 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
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28. 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
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29. 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
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30. 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
… url for 1040X Instructions
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31. 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
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32. 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
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33. 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
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34. 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
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35. 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
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36. 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.
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37. 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
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38. Prior Year Returns Returns for 2013, 2014 and 2015 can be e-filed
State may be different
Check with ERO or Local Coordinator
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39. Amended or Prior Year Returns
Comments? Questions?
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