Enrolled Agent Tax Topic: Amended Tax Returns

Taxpayers may need to submit amended tax returns when a mistake is discovered on a previously filed return. However, amending is not necessary when the IRS locates math errors and sends a notice of correction. In those cases, taxpayer agreement with the corrected amount is all that’s required. A tax enrolled agent can respond to the IRS by representing the taxpayer. These professionals also possess training from enrolled agent CE to assist taxpayers in determining the correct response to the IRS. This is especially critical if an amended tax return is necessary.

When an amended tax return is required to accurately resolve a situation with the IRS, following the correct procedure is essential. This causes faster processing of any refund or accurate assessment of any tax owed without incurring additional penalties. These proper measures to attain final resolution are a subject of EA continuing education. An amended tax return permits corrections to originally reported income, deductions, tax credits, or filing status.

A copy of the originally filed tax return is required before proceeding with preparing an amended return. Copies of any pages with inaccurate information are marked “As Originally Filed” for submission with the amended tax return. Then, new schedules and forms are prepared with the corrected figures. In some cases a schedule is required that was not included with the originally filed return. Enrolled agent hours cover this detailed process of comparing original amounts to changes. A new Form 1040 tax return is compiled after all income, deductions, and credits are accurately calculated on the appropriate schedules and forms.

Finally, Form 1040X is used to summarize the lines on page 2 of the new Form 1040. The tax calculation on Form 1040X shows any additional refund for the taxpayer by reflecting any overpayment already refunded from filing the original return. The IRS will determine any interest payable with the refund. Interest is added to the refund check.

Alternatively, Form 1040X may reflect an amount of tax owed because the original refund was more than the taxpayer was entitled to receive. Penalties and interest apply to such situations. The services of an Enrolled Agent may benefit a taxpayer seeking abatement of penalties due to reasonable cause for the error.

A statement is required on Form 1040X explaining the reason for amending. Sometimes, documents that explain the changes are attached.

Tax professionals are valuable to the entire process of amending tax returns. The expertise they possess from completion of enrolled agent continuing education requirements is helpful to taxpayers. Enrolled agents are particularly beneficial because they can communicate with the IRS on behalf of a taxpayer.