The right way to file a 1040-X (and when not to)
Working with clients doesn’t always end once a return is filed. When they bring updated documents or corrected info, you must know when to file Form 1040-X and when to let the IRS handle it. Understanding this distinction helps you avoid unnecessary amendments and better serve your clients.
Below, you’ll find a few of the top questions from a recent webinar on the topic and their corresponding answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.
Q: What is the difference between a superseding return and an amended return?
A: A superseding return is a complete replacement of the original return filed before the original return’s due date (including extensions). A Form 1040-X is used for an amended return, which is filed after the due date or to correct issues not resolved by a superseding return. Superseding returns are not filed on Form 1040-X [Treas. Reg. §1.6011-1(a)].
Q: How can taxpayers repay a refund received in error in a future tax year?
A: If a taxpayer received a larger refund than they were entitled to and an amended return reduces the refund amount, they must repay the excess. This can be done by sending a check to the IRS with a detailed explanation or waiting for the IRS to issue a notice of adjustment. See: https://www.irs.gov/taxtopics/tc202.
Q: Should tax preparers pay penalties and interest due to their own error?
A: While not required by law, some tax professionals may choose to voluntarily reimburse clients for penalties and interest resulting from their own mistakes. This is a professional and ethical decision and may vary by firm policy.
Q: Should a Form 1040-X be filed to correct an error on a 1098-T for the American opportunity tax credit?
A: Yes. If the wrong dependent’s name or SSN was listed on a Form 1098-T, and this affects the American opportunity tax credit, a Form 1040-X should be filed with corrected information. If not corrected, it could impact eligibility for others trying to claim the credit for that dependent.
To learn more about filing amended returns for individual taxpayers, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial.