Amended Federal Income Tax

Amended Returns

Sometimes a tax return  which has already been filed needs to be changed or corrected.  The forms filed to correct income tax returns are called amended returns.  For individuals or married couples, they consist of a form highlighting the changes for the IRS (called a 1040x) and a corrected individual tax return (form 1040).  They can also include other forms or information that are needed to inform the IRS why the change is needed.

Reasons to File Amended Returns

Amended returns can result in an additional refund or more tax to be paid.  One common reason why people need to amend their tax returns is that they’ve filed too early.  Taxpayers who expect to have refunds sometimes file very early in the year to claim their refunds, only to receive a form (1099) reporting additional income that they had forgotten about.  When they receive the additional form, they need to file an amended return and pay the additional tax that is due on the income that was left off of the original return.

Amending a return to pay additional tax is no fun at all, but sometimes taxpayers can amend their returns to get additional money back.  This can happen because the original return contains an error in the IRS’s favor, because the taxpayer became aware of new information that helps the taxpayer, or because information that  was reported on a correct original return could have been reported in a different correct way to yield a better result.   Occasionally it even makes sense to amend prior return to pay additional tax when doing so sets the taxpayer up save even more money in the current year.


Opportunities to Amend for Refunds

Here some situations where taxpayers  should consider having a tax professional review their prior returns for opportunities to amend:

  • The taxpayer is in business and has spent significant money on equipment in recent years but the business has performed better or worse than expected since then.
  • The taxpayers are married but filed separate rather than joint returns for any of the past few years.
  • The taxpayers are a legally married same sex couple and were unable to file joint income tax returns before the Defense of Marriage Act (DOMA) was repealed.
  • The taxpayer has prepared his or her own return in the past, but has had new or more complicated tax situations in recent years and isn’t fully confident that the returns are correct.

These are just a few situations where it pays to have past returns reviewed and possibly amended by a tax professional, but there is a time limit on when you can do so.  For an amended return to result in a refund, it must be filed within three years of when the original return was filed or two years of when the tax was paid, whichever is later.  As of February, 2014, that means that individual income tax returns for 2010, 2011, and 2012 may still be amended to claim an additional refund if one is due.  Taxpayers will no longer be able to amend 2010 returns after April 15, 2014, unless the original returns were placed on extension during the 2010 filing season.  

Federal Filing Status Income Tax

Married Separately vs Married Jointly

Married taxpayers have the option of filing separate returns (with the status of Married Filing Separately, or MFS) or joint returns (Married Filing Jointly, or MFJ). Taxpayers are often unsure of which filing status will give them the best result, and there’s a common belief that filing separately is better than filing jointly. Under current tax law and in most common situations, the opposite is generally true. Married taxpayers who file joint returns tend to pay the same or less tax than they would if they filed separate returns.

To understand why, it’s important to consider the tax tables for joint and separate filers as well as some of the the special rules that apply to married taxpayers.  The 2013 tax rate tables for married taxpayers filing separately and filing jointly are provided below:


 Tax Tables – Joint and Separate

Taxable Income Rate Taxable Income Rate
$0 to $8925 10.0% $0 to $17,850 10.0%
$8,926 to $36,250 15.0% $17,851 to $72,500 15.0%
$36,251 to $73,200 25.0% $72,501 to $146,400 25.0%
$73,201 to $111,525 28.0% $146,401 to $223,050 28.0%
$111,526 to $199,175 33.0% $223,051 to $398,350 33.0%
$199,176 to $225,000 35.0% $398,351 to $450,000 35.0%
$225,001 and over 39.6% $450,001 and over 39.6%

The tax brackets for joint filers are twice as wide as the tax brackets for married taxpayers filing separately.  At first glance, it would appear that filing separately is no worse than filing jointly, but that is only true when both spouses would be in the same tax brackets on their separate returns.


Filing Status Comparison

The table below compares joint and separate filing status for a married couple where there primary wage earning earns $60,000 and their spouse earns $30,000.  They have no children, no other income, and they are claiming the standard deduction.

Spouse 1 Spouse 2 Total Joint
Income      60,000      30,000      90,000      90,000
Standard deduction      (6,100)      (6,100)    (12,200)    (12,200)
Exemptions      (3,900)      (3,900)      (7,800)      (7,800)
Taxable Income      50,000      20,000      70,000      70,000
Tax         8,429         2,554      10,983         9,608

This is a fairly common scenario, and the married taxpayers are already giving up $1,375 if they file separately rather than jointly.  With a larger difference in incomes between spouses, the difference in tax between the two filing statuses could be $10,000 or more.

Although there are times when filing separately will yield a lower tax, the most common reasons to file separately are not tax related.  Couples who are newly married, or couples who have had a rough patch may have filed separate returns because they simply weren’t comfortable with having merged finances.

Fortunately, married couples who have filed separately in recent years may be able to amend those returns and elect to file jointly instead.  Taxpayers can change from married filing separately to married jointly on an amended return filed within three years of the separate returns’ original due-date.  As of this post, tax returns for 2010, 2011, and 2012 may still be amended and, 2009 returns can be amended if the original returns were filed on extension.



IRS Filing Status Tool

Form 1040 (Tax Tables), Tax Table and Tax Rate Schedules

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