American taxpayers will soon find it easier to correct their tax returns after the Internal Revenue Service (IRS) announced electronic amendments will be introduced for the first time this summer.
The move will be welcomed by those who prefer to use the best tax software packages (opens in new tab) to manage their financial affairs online, as well as those currently reluctant to venture outside. While electronic filing is already available for regular income tax returns, amended returns – known as Form 1040-X – have always had to be filed on paper.
The IRS said the new electronic option will allow for faster amended returns and also help reduce errors normally associated with manually completing the form. About 3 million Forms 1040-X are filed by taxpayers each year.
Back in April, at the height of the coronavirus lockdown, the IRS (opens in new tab) urged taxpayers to file electronically as social distancing meant it was unable to process individual paper tax returns. The Covid-19 outbreak has also seen the tax filing deadline extended to July 15, from April 15, although some have been keen to file to make sure they receive their coronavirus stimulus payment (opens in new tab). Those looking to file prior year tax returns (opens in new tab) to secure a tax refund for 2016 have also been given until July 15 to make their move.
"This new process is a major milestone for the IRS, and it follows hard work by people across the agency," said IRS Commissioner Chuck Rettig. "E-filing has been one of the great success stories of the IRS, and more than 90% of taxpayers use it routinely. But the big hurdle that's been remaining for years is to convert amended returns into this electronic process. Our teams have worked diligently to overcome the unique challenges related to the 1040-X, and we look forward to offering this new service this summer."
How will electronic tax amendments work?
When electronic filing becomes available later this summer, only tax year 2019 Forms 1040 and 1040-SR returns will be able to be amended electronically. In general, taxpayers will still have the option to submit a paper version of the Form 1040-X and should follow the instructions for preparing and submitting the paper form.
File your tax return faster and more efficiently with the best tax software packages (opens in new tab).
The IRS says the new option will allow for “more complete and accurate data in an easily readable format”, and will therefore help customer service representatives to answer taxpayers' questions. Anyone wanting to check the status of an electronically-filed 1040-X will still be able to use the "Where's My Amended Return? (opens in new tab)" online tool.
The coronavirus pandemic has already changed the way Americans spend their money (opens in new tab), and now it is changing the way money can be managed too, with the IRS promising additional enhancements are already planned for the future.
"Adding amended returns to the electronic family also complements our partnership with the tax software (opens in new tab) industry, which continues to work with us to provide better ways to help taxpayers," said Ken Corbin, Commissioner of the IRS Wage and Investment division.