Amended and Prior Year Returns
About Amended and Prior Year Returns
• Additional resources listed in L&LT “References” tab
• Review all tips and cautions in the lesson
• Read all examples and sample interviews
• We will review answers to each exercise
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Amended and Prior Year Returns
Objectives – Amended and Prior Year Returns
This lesson helps tax preparers understand how to:
• Identify when it is appropriate to prepare an amended return, Form
1
040X
• Determine the time limits for filing Form 1040X
• Identify how to assemble and submit Form 1040X
• Provide guidance when preparing prior year returns
• Identify when it is appropriate to file a prior year return
• Time Required: 15 minutes
Amended and Prior Year Returns
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Topics
• When to amend a return
• Form 1040X
• Time limits on refunds
• Refunds and balance due
• Completing amended returns
• Prior year tax returns
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Amended and Prior Year Returns
Key Terms
Definitions are always available in the L&LT online Glossary.
• Form 1040X
• Injured Spouse Relief
Amended and Prior Year Returns
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When to Amend a Return
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Amended and Prior Year Returns
• What are some reasons a taxpayer would need to amend their return?
• Received another Form W-2, a corrected Form W-2, or another
income statement that was not reported on the original return
• Received an additional Form 1099 (such as unemployment
compensation) or a corrected Form 1099
• Claimed their own personal exemption on the return when someone
else was entitled to claim it
• Claimed deductions or credits they should not have claimed
• Did not claim deductions or credits they could have claimed
• Should have used a different filing status
• When is an amended return not required?
• Math errors – the IRS will correct them
• The IRS notifies the taxpayer to provide missing schedules/forms –
the taxpayer should respond to the contact person on the notice
When to Amend a Return
“Injured Spouse” on a joint return is not obligated for past due amounts
owed by their spouse, such as child support, education loan, or prior year
taxes.
• File
Form 8379 by itself, if it was not filed with their original return
• File Form 8379 w
ith Form 1040X to claim additional refund not
associated with the original injured spouse claim, to avoid having the
injured spouse’s overpayment (refund) applied to the offset against the
spouse
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Amended and Prior Year Returns
Form 1040X
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Amended and Prior Year Returns
• Enter the year for which it is being submitted
• Three columns:
• Column A – the original or IRS-adjusted figures from the original
return or previous amendment
• Column C – the correct entries
• Column B – net change between columns A and C
Form 1040X
• Part I, Exemptions and Dependents
• Use only if the taxpayer is changing the number of exemptions being
c
laimed on line 6d
• Part II, Presidential Election Campaign Fund
• Make a $3 donation for taxpayer (or spouse) if they did not originally
d
o so
• Part III, Explanation of Changes
• Should be concise and easy to understand
• Examples:
• “Taxpayer received another W-2 after they filed original return”
• “Taxpayer meets the qualifications to file as Head of Household instead of
Married Filing Separately”
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Amended and Prior Year Returns
Time Limits on Refunds
• If a refund is expected, taxpayers must file the amended return within
three years from the due date of the original return
• There are exceptions to the three-
year limit, explained in Pub 17 and
Form 1040X Instructions, but they are out of scope. Refer taxpayers
with these situations to a professional tax preparer:
• “Financially disabled” (taxpayers rarely qualify for this status)
• Claiming a loss on a bad debt or worthless security
• Claiming a foreign tax credit or deduction
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Amended and Prior Year Returns
Refunds and Balance Due
• If the amended return results in a refund due:
• The taxpayer must wait until the original return is processed.
• The taxpayer can cash the original refund check, if any, while waiting
for the additional refund.
• Interest will be paid for a refund on an amended return; this interest
will be taxable in the year it is received.
• Normal processing time is 12 to 16 weeks.
• Check the status of 1040-X using Where's My Ammended Return.
• If the amended return results in a balance due:
• Instruct the taxpayer to file by the April due date, and pay the amount
due in full (or as much as possible) to minimize interest and penalties.
• See Form 1040X Instructions for more information on payment
options.
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Amended and Prior Year Returns
Completing Amended Returns
• The scope of preparing amended returns in the VITA/TCE programs has
changed
• Follow the interview process and use the research tools to prepare an
accurate amended return
• Can amend returns regardless of where the original return was
prepared, using TaxSlayer
• The option to electronically file an amended return is available for
Forms 1040 and 1040-SR for tax years 2019 and later and Forms 1040-
NR, 1040-SS, and 1040-PR for tax years 2021 and later. All other
amended returns must be mailed to the IRS.
• Pub 4012, Tab M, Other Returns, Amended Returns provides step-by-
step guidance
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Amended and Prior Year Returns
Prior Year Tax Returns
• VITA/TCE sites are not required to prepare prior year returns but are
encouraged to provide assistance for the previous three years.
• For returns older than three years without the required materials, or
i
f the site is unable to assist, taxpayer must seek help from a paid
preparer
• Volunteer requirements:
• Prior year returns may only be prepared by volunteers when the tax
i
ssues fall within the scope of their current level of training and
certification
• Resources:
• Prior year tax preparation software
• A current year Form 13614-
C must be completed for each prior year
to help determine the scope and certification level of each return
• Reference materials – P
ubs 17 and 4012, volunteer quality
alerts/volunteer tax alerts
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Amended and Prior Year Returns
Out of Scope for this Lesson:
• Taxpayers who may qualify for an exception to the three-year time limit
for filing an amended return
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Amended and Prior Year Returns
Summary
• Amended returns should be filed to correct any error or omission that is within
scope.
• Additional notes:
• The option to electronically file an amended return is available for Forms
1040 and 1040-SR for tax years 2019 and later and Forms 1040-NR, 1040-SS,
and 1040-PR for tax years 2021 and later.
• A refund on an amended or prior year return cannot be direct deposited; a
check will be mailed to the taxpayer.
• When amending the federal return, it is usually necessary to amend the state
return.
• Prior year returns may be prepared only if the tax issues come within the
volunteer’s current level of training and certification.
• If a taxpayer requests return preparation assistance for returns older than
three years or if the site is unable to prepare prior year returns, refer the
taxpayer to a paid preparer to complete the prior year returns.
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Amended and Prior Year Returns