Congratulations, you’re done with your 2015 tax returns and it’s time to have a beer. Before you stash away your calculator and crack open your celebratory beverage, though, take a moment and consider whether you uncovered a credit or deduction you could have used before — or if you caught some error this year than went unnoticed in the past. If so, it may be worth redoing your older returns.
The IRS allows you to amend previous tax returns for a number of reasons: to correct your filing status or any errors claiming dependents; to change the amount of income you originally reported; or to add or get rid of any deduction or credit.
“Some people are in a big hurry to get their taxes done and get ahead of themselves,” Robert Steen, director for retirement financial planning at USAA, noting that some taxpayers may not have all their forms, like 1099s reporting capital gains, when they first file their taxes. In that case, you might owe taxes on previously unreported income.
But there are other, more beneficial reasons to revisit your old returns. “If you weren’t in a situation to have a normal tax return environment, say you got rushed, there was a death in the family, or you were pregnant,” Steen says. “Maybe it’s worth going back and looking at old returns.”
Filers may still be able to reduce their taxable income or lower their tax bracket for past years by making changes to older returns. For example, you might reverse a Roth IRA conversion or carry back a net operating loss for a business from this year to the previous year, says Steen. (You can also carry it forward.)
Same-sex married couples who have been married since 2012 can refile old federal taxes to change their status to married filing jointly or married filing separately if they haven’t done so already. The IRS only began recognizing gay unions after a landmark Supreme Court ruling in 2013 and said these couples could amend earlier returns.
Generally, you have three years from the original filing date or two years from the date you paid the tax (whichever is later) to refile and get a refund. But don’t rush to amend a tax return over a mathematical error. Typically, the IRS will catch these mistakes and notify you of any changes it makes to your tax return.
To amend older returns, complete the two-page Form 1040X. You can’t do this electronically. On the form, you must correct the amounts that differ from what you originally reported on your tax return. The form also includes a section for you to explain your amendment. Attach any corrected schedules to the Form 1040X as well.
Remember you’re still liable for the interest and penalties on any additional taxes you didn’t pay because of the incorrect return. However, the IRS may waive any interest and penalties if you have a good reason for underreporting your tax.
To check the status of your amended return, use the IRS tool “Where’s My Amended Return?” online.