How Do I Amend a Business Tax Return?

You may need to file a tax return amendment for a business if there is a mistake on the original that impacts what you owe or there is new applicable information.

Key takeaways:

• The IRS allows taxpayers to submit amended tax returns to correct an error that impacts the taxes owed or update relevant info.
• Steps for filing:
  1. Find the correct form to use, which will vary based on the business type.
  2. Gather and fill out all relevant information.
  3. Send the form to the right place!

Tax mistakes happen all the time, and it’s common for business owners to need to make changes down the road. You may have made an error on a business tax return or have new information to include after the fact, and you can file an amended return when necessary. Sometimes, doing this may result in a change in tax liability.

The IRS has some fact-checking mechanisms in place and can catch many mistakes on a return. The agency may then reach out and notify a taxpayer of the issue and next steps, including how to file an amended return.

Here is a walk-through of amended tax returns and how to file them as a business owner:

What is an amended tax return?

While you can’t change any details on an original income tax return once it’s filed, you can submit a tax return amendment afterward if a change must be made. The only exception to changing the originally filed return is if it was rejected, and you must address an issue to resend it.

Whether you missed out on a tax break that you want to claim later or the tax return had a mistake, you can submit the appropriate form to amend. Taxpayers have three years from the date of the original return filing date, including extensions, or two years after the date they paid taxes, whichever is later. Note that the original filing date is considered the due date for that tax year, so filing early won’t impact it.

Amending a return may result in a higher or lower tax liability, so business owners should be prepared to pay a larger amount or get a credit, if applicable.

When to file an amended business tax return

You will be required to file an amended return if you made an error that will impact the tax you owe, you have new information that must be included, or the following business information changes:

• Income
• Deductions
• Tax credits
• Refund amount
• Dependent information, if an individual return

When you don’t need to submit a tax return amendment

If there are mathematical errors on your tax return that you missed, or you forgot to include a tax form that should have been submitted, you likely don’t need to file an amended return. In both cases, the IRS usually steps in. In the event of an error, they should correct it or request a correction. And if you missed a form, they’ll mail it to you.

Steps for amending a tax return

So, how do you go about filing an amended tax return? Follow these three steps for a smooth process:

1. Find the right form to use

The IRS form you submit will depend on the type of business. Here is an overview of each:

• Form 1040-X, Amended U.S. Individual Income Tax Return: This form is used by individuals, sole proprietors, and single-member LLCs.
• Form 1065, U.S. Return of Partnership Income: Partnerships and multiple-member LLCs will send an amended Form 1065 and check the Amended Return box on Line G.
• Form 1120S, U.S. Income Tax Return for an S Corporation: S corporations need to file an amended Form 1120S and check Amended Return on Line H.
• Form 1120X, Amended U.S. Corporation Income Tax Return: C corporations will use Form 1120X to file an amended return and include any new applicable information.

Ensure you’re always using the most recent version of the appropriate form.

2. Gather your information

You’ll need a few things to amend your return. Aside from the IRS form, gather the return you’re amending, all forms, schedules, and worksheets submitted with it, and any notices from the IRS alerting you that adjustments are needed.

3. Send the form to the right place

If filing Form 1040X, send it to the address that appeared in the IRS notice or to the address provided in the form instructions. For Forms 1120S and 1120X, send the amended return to the same address where you filed the original return. Corporations can also file online using the IRS’s electronic filing system. Partnerships can mail their amended return to the indicated office per location on the Form 1065 instructions document.

Always make sure everything included on the amended tax return is accurate and up to date so that there are no further issues.

Are there implications of filing an amended return?

There are just a few considerations for business owners who need to amend their tax returns. If you made a mistake on your original tax return that led to owing more tax, you may be subject to more penalties or interest accrual—so it’s better to file an amended return as soon as possible. 

Some taxpayers worry that filing an amended return will prompt the IRS to look a bit closer at the business tax return. But that likely isn’t the case, especially if you submit everything as soon as you can and ensure accuracy and honesty. The IRS won’t proceed with a tax audit just because someone filed an amended return.

Get your questions answered by tax experts

Filing an amended tax return may seem daunting if you’ve never done it before. The Provident CPA and Business Advisors team can help assess your specific situation and take the right steps toward resolution. 

Contact us today to set up a consultation.