At a Glance
Main Takeaway
Last month, the IRS streamlined the tax return process by increasing the number of tax forms taxpayers can amend electronically. This initiative allows taxpayers to amend returns, including Form 1040-X, using available tax software products.
Next Step
Filing and amending tax forms electronically significantly improves traditional paper filing methods. Learn the benefits of e-filing and how to amend your tax return online.
What are the Benefits of Filing and Amending Returns Electronically?
Every year, more taxpayers choose to file and amend tax returns electronically. For the 2021 fiscal year, 90% of taxpayers selected to file their individual tax returns online, with nearly 203.6 million returns and other forms filed electronically.
Electronic filing (E-file) has shown several benefits over traditional mail tax filing methods, allowing for increased speed, safety, and accuracy at every step of the filing process.
Faster
Electronic filing is the quickest way to file your tax return and receive your refund. When you file by mail, you must handwrite your information and wait for your forms to travel through the mail. Handwriting your returns makes mistakes more likely since IRS agents may misread your written information, and issues with postal service delivery may result in a lost tax return.
Even if there are no mistakes or other issues in your paper-filed tax return, it can take six to eight weeks from the date the IRS receives your mailed return to receive your refund. If you file electronically, your refund could be issued in less than 3 weeks. If your forms contain a mistake the IRS cannot correct, you could opt to amend your return. Due to Covid-19 processing delays, the IRS currently takes up to 16 weeks to process amended returns.
Safer
Your tax return contains sensitive information, such as the social security numbers of you and your family members, along with all your financial information. If this information should fall into the wrong hands, it could harm you, your family, or your business.
E-filing can protect you from tax-related identity theft. When you e-file, your sensitive information is directly transmitted to the IRS’ computer system, making it much less likely to be stolen as it uses modern encryption technology to protect tax returns.
What Forms can be Amended Electronically?
You can now amend several forms electronically. Last month, the IRS announced that taxpayers could make electronic amendments to several 1040-X Forms, including:
- S. Nonresident Alien Income Tax Return: Form 1040-NR
- S. Self-Employment Tax Return: Form 1040-SS (which includes the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico)
- Self-Employment Tax Return – Puerto Rico: Form 1040-PR
You may now amend Forms 1040 and 1040-SR from 2019 or later and Forms 1040-NR, 1040-SS, and 1040-PR from 2021 or later.
Taxpayers can still check the status of their e-filed Form 1040-X with the IRS’ Where’s My Amended Return tool.
How to Amend Tax Returns Electronically
The IRS can usually find and correct your mistake during processing if you have made an error or omitted something from your original tax return. If they cannot fix your mistake, they may ask you to amend your tax return electronically by filling out Form 1040-X.
To prepare your 1040 amended return, gather your original return and any new documents you need, along with Form 1040-X.
Form 1040-X Part I consists of three columns:
- Column A: original numbers reported on your tax return
- Column B: how numbers on your original return need to decrease or increase
- Column C: the corrected numbers
Part III of the form allows you to explain why you are filing an amended return. Once Form 1040-X is complete, you can file it electronically with supporting documentation like an amended W-2 or 1099.
For the IRS to consider your amended return, you must file within three years after the date you timely filed your original return or within two years after the date you paid the tax, whichever is later. Filers are allowed to submit up to three “accepted” amended returns electronically. After the third accepted amended return, all subsequently amended returns will be rejected.
If you are unsure if you need to amend your tax return, the IRS’ Interactive Tax Assistant tool can help you determine whether or not you need to re-file.
When Must an Amended Return be Paper Filed?
While the IRS now offers more options for e-filing, certain returns cannot be filed electronically.
Currently, only 1040 and 1040-SR returns from tax years 2019, 2020, and 2021, and Form 1040-NR and 1040-SS/PR returns from the tax year 2021 can be amended electronically. If you need to amend a return from prior years but filed your original return on paper, you must also file your amended return by mail.
Certain other situations make filing by mail a better option than e-filing. Some amendments must be submitted along with your original return, so if you have already filled out a paper form, it may be easier to file your amendment form by hand for consistency.
If the IRS rejected your e-filed tax return, mailing your correct return allows you to attach an explanation for the errors and any necessary supporting documents.
If you plan to use Form 8379 to request injured spouse relief but have already filed your joint tax return, you must file the form by mail.
Windes Can Help with Tax Preparation
Work with Windes to help navigate yearly IRS tax policy changes. We offer business and individual tax preparation expertise to help you find and use tax credits, incentives, and deductions to improve your returns.
If you own a business, Windes can help minimize your tax exposure and maximize tax deductions and incentives to keep your business thriving. We offer business accounting and tax preparation assistance to help you stay current and efficient as electronic tax amendment options improve.
The accounting professionals at Windes understand the complexities of conducting business across state lines and work with you to provide optimal tax solutions for multi-state operations.
Connect with us today for questions regarding the new IRS electronic amendment rules or speak with our tax professionals at taxalerts@windes.com.