Does Amending Taxes Red Flag Them for Audit?

If your 1040 is wrong, an amended return can fix it.

If your 1040 is wrong, an amended return can fix it.

If you discover that you screwed up your federal income tax forms, you can fix them by filing an amended return. The IRS says you needn't worry if it's a simple math error or if you submitted an accurate return but left out some paperwork. However, if you wrote down the wrong filing status, claimed too much or too little income or omitted deductions or credits, you need to submit a new return.

Amending Returns

To amend your return, you must submit a Form 1040X, along with a copy of the original return and any forms or schedules that contained incorrect information. The 1040X has three columns: one for the original figures, one for your corrections and the third to show the differences. If you're asking for a bigger refund or tax credit, you must get the 1040X to the IRS within three years of submitting the original return or two years from when you paid the tax, whichever is later. There's no fee for filing the 1040X.


You have to file a hard copy of Form 1040X since the IRS e-filing system doesn't accept amended returns. It takes the agency eight to 12 weeks to process an amended return, but don't wait that long to send money. If you owe additional tax, the IRS expects a check or money order in the same envelope as the form. The longer you wait to pay, the more interest and penalties accumulate. The changes to your federal return could affect your state income taxes, so contact your state tax office as well for information about adjusting your filing.

The Audit Threat

Filing an amended return doesn't automatically unleash the auditors, the IRS says. Since the agency is going over your return twice, however, that doubles the chance they'll spot a red flag. Only 1.1 percent of individual taxpayers are audited annually, but if you're self-employed or make more than $200,000 a year, the risk increases. If the deductions on your revised return are unusually large compared to your income, that also boosts the odds of an audit. Deductions for large charitable donations and business travel and entertainment expenses are also red flags.


Consumer Reports recommends that you make copies of any documentation -- receipts for business expenses, for example -- proving you overpaid on your original return, and send them along with the 1040X to reduce the risk of an audit. If you're amending a return that's more than three years old, it falls outside the IRS statute of limitations unless you underreported your income by at least 25 percent. Except in cases of outright fraud, the IRS doesn't go back any farther than six years.


About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.

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