The right way to file a 1040-X

Working with clients doesn’t always end once a return is filed. When they bring updated documents or corrected info, you must know when to file Form 1040-X and when to let the IRS handle it. Understanding this distinction helps you avoid unnecessary amendments and better serve your clients.

Below, you’ll find a few of the top questions from a recent webinar on the topic and their corresponding answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.   

Q: What is the difference between a superseding return and an amended return?

A: A superseding return is a complete replacement of the original return filed before the original return’s due date (including extensions). A Form 1040-X is used for an amended return, which is filed after the due date or to correct issues not resolved by a superseding return. Superseding returns are not filed on Form 1040-X [Treas. Reg. §1.6011-1(a)].

Q: How can taxpayers repay a refund received in error in a future tax year?

A: If a taxpayer received a larger refund than they were entitled to and an amended return reduces the refund amount, they must repay the excess. This can be done by sending a check to the IRS with a detailed explanation or waiting for the IRS to issue a notice of adjustment. See: https://www.irs.gov/taxtopics/tc202.

Q: Should tax preparers pay penalties and interest due to their own error?

A: While not required by law, some tax professionals may choose to voluntarily reimburse clients for penalties and interest resulting from their own mistakes. This is a professional and ethical decision and may vary by firm policy.

Q: Should a Form 1040-X be filed to correct an error on a 1098-T for the American opportunity tax credit?

A: Yes. If the wrong dependent’s name or SSN was listed on a Form 1098-T, and this affects the American opportunity tax credit, a Form 1040-X should be filed with corrected information. If not corrected, it could impact eligibility for others trying to claim the credit for that dependent.