Determining If You Need to File a 1040X
The amended tax return form is known as a Form 1040X. The 1040X is used only to correct one of the following income tax return forms: 1040, 1040A, 1040EZ, 1040NR or 1040NR-EZ.
The amended tax return form has a few different purposes. For instance, the taxpayer can use it to make elections, such as taking advantage of certain deductions or removing a deduction for which you didn't actually qualify. A taxpayer can also use it to change filing status, such as changing from "married filing separately" to "married filing jointly." (Please note, however, that you can't change your status from joint to separate). Yet another purpose is to change certain amounts previously adjusted by the IRS. The IRS points out that you should not include any interest or penalty amounts, however.
Finally, a taxpayer can use 1040X or Form 1045 to make a claim for a netoperating loss (NOL) carryback. A "carryback" refers to a special way that companies (including individuals who run their own businesses as sole-proprietorships, partnerships or S corporations) can apply losses from the current year against the taxable income of a previous year.
For example, say a taxpayer runs a small consignment shop business that made $15,000 last year. This year, the taxpayer decided to rent out a larger retail space and buy more clothes racks but ended up losing $9,000 by the end of the year. The taxpayer could "carryback" this loss to last year's taxable income retroactively with a 1040X and ask for money back from the IRS.
So, what if you realize you made a simple math mistake? Or it occurs to you that you didn't include a copy of a W-2 that was required? The IRS clearly states that you should not file a 1040X for such minor mistakes. Instead, the IRS will catch it and let you know whether it requires further action [source: IRS Topic 308].
Also, if you only need to update your address, you can use Form 8822. Likewise, the IRS has a different form (Form 843) for requesting a refund of penalties and interest or an addition to a tax that was already paid. If a taxpayer qualifies as an "injured spouse," meaning the joint overpayment should be applied to the spouse's tax obligation, the taxpayer can fill out a Form 8379, not a 1040X, to request a refund for the taxpayer's share of the overpayment.
On top of everything, don't forget to check with your state to see whether the change affects the taxes you filed with them. Next, we'll look at deadlines.