Should You File an Amended Return? It Depends. Tax Expert Rob Wood Explains Why
You filed your tax return before the deadline. And then, you noticed a flaw in it. Perhaps it’s a mathematical error. Maybe you forgot to attach a W-2 form. Maybe you just got a Form 1099 listing some income you forgot about. Should you file an amended return? Tax lawyer Rob Wood gives an unconditional “Maybe, maybe not” response. He explains the whys and why-nots in this report. He also discusses the subject in his article, “Amend Your Tax Return Right After Filing? Be Careful.”
Wood says the IRS answer to the question, “Should I file an amended return?” would be yes. That may not be true. One thing taxpayers need to understand is that they can’t make corrections that only help them and ignore those that would help the government. A tax return is signed under penalty of perjury, so there’s no room for error. Wood also points out that there is usually no legal duty to amend a tax return. For example, if you get a Form 1099 a month after your return was filed, you are under no obligation to amend. The IRS will also receive the missing 1099, and they will send a bill to a taxpayer who filed without it.
Amending in that situation is “sort of a permissive obligation,” Wood explains. An exception to that rule is when a taxpayer files a return knowing it is wrong, perhaps because it was based on estimates. In that situation, you need to file an amended return that is accurate.
Can a return be corrected without filing an amended return? In some instances. For example, you file a return in February, then realize in March that it contains a mistake. If the April filing deadline has not passed, you may be able to file a second return, substitute it for the first one, and have it not be considered an amendment. Wood says that there is information on doing this on the IRS website.
As to what kind of mistakes can be corrected by amendment, Wood notes that a mistake in math is not such a mistake. The IRS will find the mistake, correct it, and either send you money or send you a bill, depending on the mistake. Likewise, if you discover that you have omitted an attachment—your W-2 form, for instance—you do not need to amend, and you shouldn’t amend, Wood says. Wood notes that the reason for the concern about amending is that amended returns are more likely to get careful scrutiny than original filings.
Another issue is the statute of limitations. The IRS limitation is generally three years. It might seem that the statute would start running all over again if an amended return is filed, but that is usually not the case. Wood says that people who are in a situation where they might need to amend should definitely get advice from an accountant or tax lawyer.
Robert W. Wood is the Managing Partner of Wood LLP, San Francisco. Often listed among the best tax lawyers in America, Wood has broad experience in corporate, partnership and individual tax matters. Concerning the tax treatment of litigation settlements and judgments, he is perhaps the preeminent tax lawyer in the United States. He is also an authority on merger and acquisition tax matters, tax opinions, offshore account and entity disclosures, and many types of tax controversies. The Legal Broadcast Network is a featured network of Sequence Media Group.