Key Takeaways
- To amend an earlier tax return, file Form 1040-X, Amended Tax Return along with the corrected or additional documents you didn't file with your original return.
- Beginning with tax year 2019, amended federal tax returns can be filed electronically.
- You should file an amended return if you need to correct an error or omission to your income, change your filing status, change your deductions, or to claim or correct a tax credit.
- If you are amending your tax return to claim a refund, the IRS requires that you file your amended return within three years of the day you filed your original return, or within two years of the day you paid outstanding tax, whichever is later.
Can I redo my taxes?
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?"
If you've been in this situation, you aren't alone. This is the process for filing an amended tax return and the tax breaks you may be able to take advantage of when you do.
Should I file an amended return?
You should file an amended return 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. You'll also reduce the risk of receiving a notice or IRS audit in the future.
Tax changes for 2019 through 2023
Recent tax changes include the following:
- Alimony: Previously, 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.
- Shared-responsibility payment: This payment, also known as the individual mandate under the Affordable Care Act, has been eliminated.
- The 7.5% deduction: Congress passed an extenders bill in 2019 that made the 7.5% deduction floor apply for 2019 tax year returns as well. In December of 2020, the Consolidated Appropriations Act (CAA) made this 7.5% threshold permanent.
- The Standard Deduction: The Standard Deduction increased in 2022, 2023, and 2024 to account for inflation. For most filers the amounts are:
- Single and Married Filing Separately filers:
- $12,550 for 2021
- $12,950 for 2022
- $13,850 for 2023
- $14,600 for 2024
- Married Filing Jointly couples:
- $25,100 for 2021
- $25,900 for 2022
- $27,700 for 2023
- $29,200 for 2024
- Head of Household filers:
- $18,800 for 2021
- $19,400 for 2022
- $20,800 for 2023
- $21,900 for 2024
- Single and Married Filing Separately filers:
- Retirement savings limits: The retirement savings limits for certain accounts are $19,500 for 401(k) plans for 2020 and 2021, up from $19,000 in 2019. This amount increased to $20,500 for 2022, to $22,500 for 2023, and to $23,000 for 2024.
- Required minimum distributions (RMDs): RMDs were temporarily suspended for 2020 only. RMDs are required in 2021 and 2022. The age at which you have to start RMDs was raised to 72 instead of 70 1/2 after the passage of the SECURE Act and then raised again to age 73 beginning in 2023 with passage of the SECURE Act 2.0.
- Mortgage insurance premiums: These premiums remain deductible for 2021 after the CAA passed at the end of 2020. However, beginning with the 2022 tax year these premiums are no longer deductible.
- Lifetime Learning Credit: The income phaseouts increased for this credit beginning in 2021 and continue at the same amount for 2022, 2023, and 2024:
- Single filers: $80,000 to $90,000
- Married Filing Jointly couples: $160,000 to $180,000
- Student loans: The CARES Act allows employers to pay up to $5,250 toward an employee's student loans from 2020 through 2025 without the employee needing to include those payments in their taxable income.
- Renewable energy investment tax credit: The CCA extended this tax credit through 2021 at 26%. New legislation passed in 2022 that revamped and renamed the existing solar credit as the Residential Clean Energy credit which is now in place through 2032 at 30% and reduces through 2034 after which it is scheduled to end.
- Pass-through deductions: Higher income limits were put in place for pass-through deductions for owners of sole-proprietorships, partnerships, LLCs, and S corporations worth up to 20% of qualified business income. The amounts begin to phase out at:
- $182,100 in 2023 and $191,950 in 2024 for taxpayers not filing a joint return
- $364,200 in 2023 and $383,900 in 2024 for married taxpayers filing jointly
- Charitable contributions: You can deduct up to $300 in charitable cash contributions on top of your Standard Deduction for 2020. This amount increases to $600 for married filing jointly filers in 2021. For 2022 and future years, charitable deductions return to only being deductible if you itemize your deductions on Schedule A.
- 2020 and 2021 Stimulus payments: You can receive stimulus payments that you didn't receive in either 2020 or 2021. The stimulus payments were an advances of a tax credits that can be claimed on your amended tax return if you did not already receive them.
TurboTax Tip:
Many tax changes take affect each year that can lead to amending a tax return, including changes to the Child Tax Credit, Credit for Other Dependents, Charitable contribution limit, Earned Income Tax Credit, income tax brackets, and more.
Major tax breaks from tax reform
You pay income and capital gains taxes on any income earned or gains received, respectively. To lower this overall tax liability, Congress has created several tax breaks to entice taxpayers to make certain desirable actions. In doing so, you're able to reduce your tax liability. If you decide to file an amended return, make sure you have a clear understanding of the tax changes, extensions, and credits.
Some of the tax changes that went into effect in 2018 include:
- business property
- Child Tax Credit
- Credit for Other Dependents
- charitable contribution limit
- corporate income tax rate
- Earned Income Tax Credit
- estate tax
- Foreign Earned Income Exclusion
- gambling expenses
- health and medical savings account contributions
- home mortgage interest limits
- income limit on Social Security tax
- Income tax brackets
- medical expenses deduction (before extension and change)
- retirement plan contributions
- Standard Deduction limits
- state and local taxes
Extension of tax breaks in 2022 include:
- American Opportunity Tax Credit
- charitable donations from IRAs
- educator expense tax deduction
- health insurance premium tax credit
- Residential Energy Efficiency Property Tax Credit
- student loan interest deduction
The following have expired beginning with the 2018 tax year:
- personal and dependent exemptions
- miscellaneous deductions subject to 2% AGI floor (a few exceptions exist that still allow deductions)
- income phaseout on itemized deductions
- moving expenses deduction (limited exception allowed for active-duty military forced to relocate)
- casualty and theft loss (now only allowed for federally declared disasters)
- home office deduction for employees
- automobile mileage rate deductions for unreimbursed employee travel expenses
While most of these changes passed into law at the end of 2017, the majority went into effect 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 not set to expire. The rate is 21%, down from 35% seen in 2017 prior to the law passing.
Finally, keep in mind that not every state adopted the new federal tax policies. Some states, like California, Texas, Minnesota, North Carolina, South Carolina, and New Hampshire, opted to not change their own laws to be more favorable to residents.
How to file an amended return
To proceed with preparing and filing your amended return, all you need to do is file Form 1040-X, Amended Tax Return, along with the corrected or additional documents you didn't file with your original return. This will amend your return and give you an accurate picture of your tax situation. Federal returns can now be amended by electronically filing them, but only beginning with the 2019 tax year (the first year this option was available).
The IRS requires that you file an amended return with a claim for refund within three years of the day you filed your original return, or within two years of the day you paid outstanding tax, whichever is later. If you file a return before the original due date of the return (regardless of extensions), the IRS treats it as though you filed it on the due date. Tax withholding from sources such as a W-2 is deemed to be tax paid on the due date.
If you experienced changes related to any of the items above that have occurred since tax reform went into effect, you should file amended returns as soon as possible to correct any errors or oversights.
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