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If there are any errors in your current or prior year tax returns, the tax returns for that tax year should be “amended” (updated or corrected). While this statement is also true for payroll tax returns, it it beyond the scope of this article. There are many reasons for amending a personal (individual) tax return, including:
1. You have made a math or clerical error.
2. After you have filed your tax return you received either a new or “corrected” form from your investment firm (1099 B or K-1), your retirement plan trustee (1099 R), a financial institution (1099 INT or DIV), your employer (W-2), an income source if you are self-employed (1099 MISC), or your mortgage lender (1098).
 To paraphrase a commercial from a well-known technology product, while there’s not “an app for that” yet, there is a form for it. The form for an individual income tax return is Federal Form 1040-X. Here is the link to the form: http://www.irs.gov/pub/irs-pdf/f1040x.pdf and the related instructions: http://www.irs.gov/pub/irs-pdf/i1040x.pdf   Part I is for data entry, Part II relates to the “Presidential Campaign Election Fund” voluntary donation, and Part III is for you to provide an explanation of the error(s) or change(s).  The instructions for this section are found on page 11.  You should only provide direct, brief, factual statements. There is no requirement for you to provide a profound apology or provide unrelated facts.
While the form is already included with almost all tax return preparation software (which greatly simplifies the math calculations), you can also use the link in the above paragraph from the IRS website:  http://www.irs.gov   The form can not be filed electronically (yet).Â
While other tax practitioners may disagree with this recommendation, my past experience and communications with other tax preparers has caused me to believe that unless you owe additional income taxes, wait until sixty days after you have filed your current year tax return (which includes extensions) before you submit the Form 1040-X. This allows the IRS to process your original return before they receive the amended return.  Â
If you owe additional taxes, you can amend your current year tax return immediately to reduce the additional associated interest and penalties which may be assessed.
Finally, if you reside (or are a legal resident of) a state which has an individual income tax, be sure that you also amend your state income tax return for the same year.
Amended Returns: Eight Facts
If you discover an error on your federal income tax return after you e-filed or mailed it, you may want or need to amend your return. Perhaps you are eligible for a deduction or credit and you missed it the first time?
Here are eight key points the IRS wants you to know about when considering whether to file an amended federal income tax return.
1.  Use Form 1040X, Amended U.S. Individual Income Tax Return, to file an amended income tax return.
2.  Use Form 1040X to correct previously filed Forms 1040, 1040A or 1040EZ.  An amended return cannot be e-filed; you must file it by paper.
3.  Generally, you do not need to file an amended return to correct math errors.  The IRS will automatically make that correction. Also, do not file an amended return because you forgot to attach tax forms such as W-2s or schedules.  The IRS normally will send a request asking for those.
4.  Be sure to enter the year of the return you are amending at the top of Form 1040X. Generally, you must file Form 1040X within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later.
5.  If you are amending more than one tax return, prepare a 1040X for each return and mail them in separate envelopes to the appropriate IRS campus.  The 1040X instructions list the addresses for the campuses.
6.  If the changes involve another schedule or form, you must attach that schedule or form to the amended return.
7.  If you are filing to claim an additional refund, wait until you have received your original refund before filing Form 1040X.  You may cash that check while waiting for any additional refund.
8.  If you owe additional 2011 tax, file Form 1040X and pay the tax before the due date to limit interest and penalty charges that could accrue on your account.  Interest is charged on any tax not paid by the due date of the original return, without regard to extensions.
Links:
- Form 1040X, Amended U.S. Individual Income Tax Return (PDF 110K)
- Form 1040X Instructions (PDF 45K)
- Tax Topic 308 — Amended Returns
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