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4 good reasons to amend your tax return

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in Small Business Tax

Although you might have just put your 2014 tax return to bed, you could get a wake-up call: uncovering an error that cost you hundreds or even thousands of tax dollars.   

Strategy: File an amended return with Uncle Sam. Simply use Form 1040X, Amended U.S. Individual Income Tax Return, to correct your mistake.

Generally, amended returns are used to claim a deduction or credit that slipped through the cracks. But that’s not always the case. For instance, if you examine your return closely, you might be able to salvage better results. Here are four prime examples:

1.  Bring separate returns together. You and your spouse may have filed separate returns to take advantage of high medical or miscellaneous expenses for one of you. But now you discover that you would have saved more tax overall by filing jointly. You can both file amended returns in this situation, but you can’t do things the other way—file separately after filing an original joint return.

2.  Take a refund for an overpayment. When you first filed your 2014 return, you may have asked the IRS to credit an overpayment toward your 2015 estimated tax liability. But now you need the extra money to pay for an unexpected emergency. Secure a refund instead by filing an amended return.

3.  Obtain faster tax relief for casualties. If you suffer a casualty loss in a federally designated disaster area this year, you don’t have to wait until you file your 2015 return to receive tax benefits. A special tax-law provision allows you to claim a loss on the prior year’s return. File an amended return for 2014 to get a quicker tax refund that can be used to help pay for necessary repairs.

4.  Switch business car methods. Instead of using the standard mileage rate of 56 cents per business mile for 2014 (57.5 cents per mile in 2015), you now figure out that you would have fared better by deducting your actual auto operating expenses. Make the switch to the actual expense method by filing an amended return. Caveat: Once you start deducting actual expenses, you generally can’t switch back to the simplified standard mileage rate.

Download Form 1040X.

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