Have you decided you need to change or correct your business tax return? Here's the process for making sure you make the corrections in the proper way. The procedure for filing an amended return depends on your business type.
- In general, you need to file an amended return if you made a substantial error that will affect what you owe; you received new information that needs to be included; or if your income, deductions, tax credits, refund, or dependent information changed.
- Typically, you have two or three years to file an amended return for a given tax year.
- The forms you need to file with your amended return vary based on which type of business you have.
Why You Must File an Amended Return
Some changes don't require you to file an amended return, while others do.
You don't need to file an amended return if:
- Your errors were math errors—the IRS will make the changes.
- You forgot to attach tax forms—the IRS will ask for these.
You must file an amended business tax return if:
- You made a substantial error on your return that will affect your tax liability (the amount you owe)
- You received new information that needs to be included
- Your income, deductions, tax credits, refund amount, or dependent information changes
In some cases, sole propreitors can file an amended return if they need to change amounts on their tax return that the IRS adjusted, or to "make a claim for a carryback due to a loss or unused credit."
When to File an Amended Return
File Form 1040-X only after you have filed your original tax return. If you want a credit or refund you must file:
- Within three years (including extensions) after the date you filed the original return, or
- Within two years after the date when you paid the tax, whichever is later
If you file early, your return is considered filed on the due date.
If your business was affected by a federally declared disaster, you may have extra time to file your return for that year.
If you are filing Form 1120-X for a corporation, you generally must file within the later of three years after the corporation filed its original return, or within two years after the corporation paid the tax.
Gather Information Before Filing an Amended Return
Before you begin the process of completing your amended tax return form, be sure you have:
- A copy of the amendment form for your business type for the year you are amending
- A copy of the return you are amending, including all supporting forms and schedules (like Schedule C or Schedule K-1), and any worksheets you completed
- Any notices you received from the IRS about making adjustments to your return
- The amendment instruction form for the year you are working on
Amending Schedule C
You'll use Schedule C to report business taxes for a sole proprietorship or a single-member LLC. Schedule C is included in your personal tax return, so to amend your business taxes you must amend your tax return. You will need to use Form 1040-X to do this. If the change in Schedule C changes your business net income (profit) amount, it may change the rest of your tax return, including possibly your self-employment tax amount.
Here's how a change in Schedule C effects is reflected in your Form 1040-X:
- First, make the change to Schedule C, and prepare a corrected copy
- The amount of the change should affect the Net Profit or Loss line
- If your business had a change in profit, you must also complete a new Schedule SE for the change in self-employment tax
- Include this changed amount on your Form 1040-X's adjusted gross income line. You must include the original amount, the change, and the new amount.
- You must then change all the resulting calculations on your tax return.
- Be sure to attach a copy of the amended Schedule C (and Schedule SE that changed) when you file the amended return.
Amending a Corporate or S Corporation Return
To amend a tax return for a corporation, complete and file Form 1120-X. You'll need to make changes to specific line items, showing the original amount, the net change, and the correct amount, using a process similar to the one for Form 1040-X.
You can apply for a quick refund of estimated taxes for your corporation by filing Form 4466. You can use this form for forms 1120, 1120-C, 1120-F, 1120-L, and 1120-PC.
To amend a tax return for an S corporation, file an amended Form 1120-S and check Box H(4) (Amended Return) on the Page 1. Attach a statement that lists each amended item, the right amount for each of those items, and an explanation for why you made each change.
If the change in S corporation taxes results in a change to shareholder information, you must also file an amended Schedule K-1 and give a copy of the amended K-1 to the shareholder. Make a copy of the original K-1, and check the correct box to indicate that it is an amended K-1. Then make the necessary changes.
Amending a Partnership or Multiple-Member LLC Return
To amend a partnership or multiple-member LLC return, make a copy of the partnership return Form 1065, and check box G(5) on page 1. Attach a statement that identifies the line number of each amended item, the corrected amount or treatment of the item, and an explanation for each change.
Most partnerships or LLCs can amend their partnership returns using Form 1065, but some partnerships or LLCs may need to use Form 1065X to amend their partnership return in certain specific cases. Check with your tax professional if you think you need to use this form.
If any income, deductions, credits, and other information on Schedule K-1 is incorrect, you'll need to prepare an amended K-1. Check the "Amended K-1" box on the top of your Schedule K-1 to indicate that it has been amended. Then give the amended Schedule K-1 to the partner or LLC member to file.
Add an Amended Schedule K-1 to Your Tax Return
If you are an S corporation shareholder, a partner in a partnership, or a member of a multiple-member LLC business, you get a Schedule K-1 to show your share of the income or loss of the business. If your Schedule K-1 has changed after your tax return has been filed, this change affects your personal tax return. Use Form 1040-X to show these changes on your tax return. Don't forget to include any changes to your self-employment tax from changes in your Schedule K-1 income.
Filing and Paying Taxes on an Amended Return
If you must pay more tax because of an amended return, you can do so by including your check with the return, or you can file electronically, using one of the IRS tax payment options. Here are the instructions for corporations and partnerships:
- For Form 1120 for corporations, generally speaking, you can file the amended return at the address where your corporation's principal business or office is located.
- Corporations and S corporations can use the IRS E-file system to file their tax returns online.
- You can file an amended partnership return by mailing it to a specific IRS office, depending on certain circumstances. See Form 1065 for the list of locations.
Frequently Asked Questions (FAQs)
How long do you have to file an amended business tax return?
You typically have two or three years to file your amended return, depending on when or if you paid taxes on the year in question.
How do you submit an amended tax return?
Generally speaking, you need to refile the form that contained errors. Some forms have an option to check a box to indicate you're submitting an amended form. If the forms you amend affect your 1040 that year, you may have to file an amended 1040, too.