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Can I Redo My Taxes and Should I?

Updated for Tax Year 2020


OVERVIEW

Congress sets the laws that change the current and future regulations around taxes. But some of these changes can also retroactively affect taxes from previous filings. You might be wondering, "Does that mean I can redo my taxes and save more?" We'll dive into that question and the answer below.


 

The federal tax filing deadline for individuals has been extended to May 17, 2021. Quarterly estimated tax payments are still due on April 15, 2021. For additional questions and the latest information on the tax deadline change, visit our “IRS Announced Federal Tax Filing and Payment Deadline Extension” blog post.

For information on the third coronavirus relief package, please visit our “American Rescue Plan: What Does it Mean for You and a Third Stimulus Check” blog post.

 

Young woman reviewing her financial and tax documents.

You pay income and capital gains taxes on any income earned or gains received, respectively. In order to lower this overall tax liability, Congress has created several tax breaks (more formally known as tax credits and tax deductions) to entice taxpayers to make certain desirable actions. In so doing, you're able to reduce your tax liability.

However, times change and with them, so do tax laws. Most recently, during a tax reform enacted at the end of 2017, certain tax breaks have been changed, extended or even added. This impacted taxes not only now and in the future, but also in the past.

If the list below sounds intimidating, have no fear because TurboTax tracks over 350 tax deductions and credits to ensure you get the biggest tax refund. But before we get there, we'll walk through some of the tax break changes and when it's worthwhile to file an amended return.

Major tax break changes from tax reform

Tax changes in 2018

Tax extensions in 2018

Tax credits added in 2018

Expired

While most of these changes were passed into law at the end of 2017, the effective date for the majority of these provisions was in 2018. Due to the impermanent nature of the tax reform bill, all of these changes are set to revert to 2017 law after 2025 with the exception of the corporate tax rate. This change is permanent and will remain at 21%, down from the 35% seen in 2017 prior to the law passing.

Finally, keep in mind that not every state adopted the new federal tax policies. Some, like California, Texas, Minnesota, North Carolina, South Carolina, and New Hampshire, instead opted to not change their own laws to be more favorable to residents.

Tax changes in 2019 and 2020

  • Alimony: In the past, the IRS allowed individuals paying alimony to deduct this from their taxable income while those receiving alimony counted it as part of their taxable income. Tax reform changed this rule effective for any alimony agreements entered into after December 31, 2018.
  • Elimination of the shared-responsibility payment (aka the "individual mandate" under the Affordable Care Act).
  • Medical Expenses Deduction: Congress passed an extenders bill in 2019 which made the 7.5% deduction floor apply for 2019 tax year returns as well. The 7.5% threshold was then made permanent by the Consolidated Appropriations Act (CAA) in December of 2020.

 

Should I file an amended return?

Have you ever filed your tax return and realized after the fact that you made a mistake or found out about new information that would change your return? You probably sat back and immediately asked yourself, "Can I redo my taxes?"

Instead of starting over with your taxes, though, you can amend your tax return and correct any errors or oversights. But this isn’t likely something you probably want to do unless absolutely necessary, so how do you know when you should?

An amended return should be filed if you need to:

  • Correct an error or omission to your income
  • Change your filing status
  • Change your deductions
  • Claim or correct a tax credit

Don’t underestimate the benefits of filing an amended return, either. By making sure your tax return is accurate you can maximize your refund or lower what you owe. Not to mention the fact that you’ll be mitigating the risk of receiving a notice or IRS audit in the future.

How to file an amended return

To proceed with preparing and filing your amended return, all you need to do is file Form 1040X, Amended Tax Return, along with the corrected or additional documents you didn't originally file with your return. This will amend your return and provide you an accurate picture of your tax circumstances.

If you experienced changes related to any of the items above which have occurred since tax reform went into effect, you should file amended returns as soon as possible to correct any errors or oversights.

All you need to know is yourself

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