IRS Pub. 17, Your Federal Income Tax
Errors may delay your refund or result in notices being sent to
you. If you discover an error, you can file an amended return or claim
Amended Returns and
Claims for Refund
You should correct your return if, after you have filed it, you
- You did not report some income,
- You claimed deductions or credits you should not have
- You did not claim deductions or credits you could have
- You should have claimed a different filing status. (You
cannot change your filing status from married filing jointly to
married filing separately after the due date of the original return.
However, an executor may be able to make this change for a deceased
If you need a copy of your return, see Copies of returns
under What Records Should I Keep, earlier in this
Use Form 1040X, Amended U.S. Individual Income Tax Return,
to correct the Form 1040, Form 1040A, or Form 1040EZ you have
Completing Form 1040X.
On Form 1040X, write your income, deductions, and credits as you
originally reported them on your return, the changes you are making,
and the corrected amounts. Then figure the tax on the corrected amount
of taxable income and the amount you owe or your refund.
If you owe tax, pay the full amount with Form 1040X. The tax owed
will not be subtracted from any amount you had credited to your
If you cannot pay the full amount due with your return, you can ask
to make monthly installment payments. See Installment Agreement,
If you overpaid tax, you can have all or part of the overpayment
refunded to you, or you can apply all or part of it to your estimated
tax. If you choose to get a refund, it will be sent separately from
any refund shown on your original return.
Filing Form 1040X.
After you finish your Form 1040X, check it to be sure that it is
complete. Do not forget to show the year of your original return and
explain all changes you made. Be sure to attach any forms or schedules
needed to explain your changes. Mail your Form 1040X to the Internal
Revenue Service Center serving the area where you now live (as shown
in the instructions to the form).
File a separate form for each tax year involved.
Time for filing a claim for refund.
Generally, you must file your claim for a credit or refund within 3
years after the date you filed your original return or within 2 years
after the date you paid the tax, whichever is later. Returns filed
before the due date (without regard to extensions) are considered
filed on the due date (even if the due date was a Saturday, Sunday, or
legal holiday). These time periods are suspended while you are
financially disabled, discussed later.
If the last day for claiming a credit or refund is a Saturday,
Sunday, or legal holiday, you can file the claim on the next business
If you do not file a claim within this period, you may not be
entitled to a credit or a refund.
If you did not file an original return when it was due, you
generally can claim a refund by filing your return within 3 years from
the time the tax was paid. The return must be received by the Internal
Revenue Service within the 3-year period. See Tax paid in
the discussion that follows.
If your return is filed late, the postmark date does not determine
the date of filing.
Limit on amount of refund.
If you file your claim within 3 years after the date you filed your
return, the credit or refund cannot be more than the part of the tax
paid within the 3-year period (plus any extension of time for
filing your return) immediately before you filed the claim. This time
period is suspended while you are financially disabled, discussed
Payments made before the due date (without regard to extensions) of
the original return are considered paid on the due date. Examples
include federal income tax withheld from wages and estimated income
You made estimated tax payments of $500 and got an automatic
extension of time to August 15, 1995, to file your 1994 income tax
return. When you filed your return on that date, you paid an
additional $200 tax. On August 15, 1998, you filed an amended return
and claimed a refund of $700. Because you filed your claim within 3
years after you filed your return, you can get a refund of up to $700,
the tax paid within the 3 years plus the 4-month extension period
immediately before you filed the claim.
The situation is the same as in Example 1, except you filed your
return on October 31, 1995, 2 1/2 months after the
extension period ended. You paid an additional $200 on that date. On
October 27, 1998, you filed an amended return and claimed a refund of
$700. Although you filed your claim within 3 years from the date you
filed your original return, the refund was limited to $200, the tax
paid within the 3 years plus the 4-month extension period immediately
before you filed the claim. The estimated tax of $500 paid before that
period cannot be refunded or credited.
If you file a claim more than 3 years after you file your
the credit or refund cannot be more than the tax you paid within
the 2 years immediately before you file the claim.
You filed your 1994 tax return on April 15, 1995. You paid taxes of
$500. On November 1, 1996, after an examination of your 1994 return,
you had to pay an additional tax of $200. On May 11, 1998, you file a
claim for a refund of $300. However, because you filed your claim more
than 3 years after you filed your return, your refund will be limited
to the $200 you paid during the 2 years immediately before you filed
You are financially disabled if you are unable to manage your
financial affairs because of a medically determinable physical or
mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not
less than 12 months. However, you are not treated as financially
disabled during any period your spouse or any other person is
authorized to act on your behalf in financial matters.
Exceptions for special types of refunds.
If you file a claim for one of the items listed below, the dates
and limits discussed earlier (under Time for filing a claim for
refund and Limit on amount of refund) may not apply.
These items, and where to get more information, are:
- A bad debt (see Nonbusiness Bad Debts in chapter 15),
- A worthless security (see Worthless securities in
- Foreign tax paid or accrued (see Publication 514,
Foreign Tax Credit for Individuals),
- Net operating loss carryback (see Publication 536,
- Carryback of certain business tax credits (see Form 3800,
General Business Credit),
- A claim based on an agreement with the Service extending the
period for assessment of tax, and
- An injured spouse claim (see Offset Against Debts,
Processing claims for refund.
Claims are usually processed shortly after they are filed. Your
claim may be accepted as filed or may be subject to examination. If a
claim is examined, the procedures are the same as in the examination
of a tax return.
Taking your claim to court.
You can sue for a refund in court, but you must first file a timely
claim with the IRS. If the IRS rejects your claim or does not act on
your claim within 6 months after you file it, you can then take your
claim to court.
The IRS provides a fast method to move your claim to court if:
- You are filing a claim for a credit or refund based solely
on contested income tax or on estate tax or gift tax issues considered
in your previously examined returns, and
- You want to take your case to court instead of appealing it
within the IRS.
When you file your claim with the IRS, you get the fast method by
requesting in writing that your claim be immediately rejected. A
notice of claim disallowance will then be promptly sent to you.
You have 2 years from the date of mailing of the notice of
disallowance to file a refund suit in the United States District Court
having jurisdiction or in the United States Court of Federal Claims.
Interest on refund.
If you receive a refund because of your amended return, interest
will be paid on it from the due date of your original return or the
date you filed your original return, whichever is later, to the date
you filed the amended return. However, if the refund is not made
within 45 days after you file the amended return, interest will be
paid up to the date the refund is paid.
Your refund may be reduced by an additional tax liability that has
been assessed against you.
Also, your refund may be reduced by amounts you owe for past-due
child support or debts to another federal agency. The refund
procedures discussed in this chapter will not be available to you to
get back the reduction. See Offset Against Debts, earlier.
Effect on state tax liability.
If your return is changed for any reason, it may affect your state
income tax liability. This includes changes made as a result of an
examination of your return by the IRS. Contact your state tax agency
for more information.
The law provides penalties for failure to file returns or pay taxes
If you do not file your return and pay your tax by the due date,
you may have to pay a penalty. You may also have to pay a penalty if
you substantially understate your tax, file a frivolous return, or
fail to supply your social security number. If you provide fraudulent
information on your return, you may have to pay a civil fraud penalty.
If you do not file your return by the due date (including
extensions), you may have to pay a failure-to-file penalty.
The penalty is based on the tax not paid by the due date (without
regard to extensions). The penalty is usually 5% for each month or
part of a month that a return is late, but not more than 25%.
If your failure to file is due to fraud, the penalty is 15% for
each month or part of a month that your return is late, up to a
maximum of 75%.
Return over 60 days late.
If you file your return more than 60 days after the due date or
extended due date, the minimum penalty is the smaller of $100 or 100%
of the unpaid tax.
You will not have to pay the penalty if you show that you failed to
file on time because of reasonable cause and not because of willful
Paying tax late.
You will have to pay a failure-to-pay penalty of 1/2 of 1% of your unpaid taxes for each month, or part of a
month, after the due date that the tax is not paid. This penalty does
not apply during the extension period available by filing Form 4868,
Application for Automatic Extension of Time To File U.S.
Individual Income Tax Return, if you paid at least 90% of your
actual tax liability before the original due date of your return
through withholding on wages, estimated tax payments, or a payment
sent in with Form 4868.
If a notice of intent to levy is issued, the rate will increase to
1% at the start of the first month beginning at least 10 days after
the day that the notice is issued. If a notice and demand for
immediate payment is issued, the rate will increase to 1% at the start
of the first month beginning after the day that the notice and demand
This penalty cannot be more than 25% of your unpaid tax. You will
not have to pay the penalty if you can show that you had a good reason
for not paying your tax on time. This failure-to-pay penalty is added
to interest charges on late payments.
If both the failure-to-file penalty and the failure-to-pay penalty
(discussed earlier) apply in any month, the 5% (or 15%)
failure-to-file penalty is reduced by the failure-to-pay penalty.
However, if you file your return more than 60 days after the due date
or extended due date, the minimum penalty is the smaller of $100 or
100% of the unpaid tax.
You may have to pay an accuracy-related penalty if:
- You underpay your tax because of either "negligence" or
"disregard" of rules or regulations, or
- You substantially understate your income tax.
The penalty is equal to 20% of the underpayment.The penalty
will not be figured on any part of an underpayment on which a fraud
penalty (discussed later) is charged.
Negligence or disregard.
The term "negligence" includes a failure to make a reasonable
attempt to comply with the tax law or to exercise ordinary and
reasonable care in preparing a return. Negligence also includes
failure to keep adequate books and records. You will not have to pay a
negligence penalty if you have a reasonable basis for a position you
The term "disregard" includes any careless, reckless, or
The penalty is based on the part of the underpayment due to
negligence or disregard of rules or regulations, not on the entire
underpayment on the return.
You can avoid the penalty for disregard of rules or regulations if
you adequately disclose on your return a position that has at least a
reasonable basis. See Disclosure statement, later.
Substantial understatement of income tax.
You understate your tax if the tax shown on your return is less
than the correct tax. The understatement is substantial if it is more
than the larger of 10% of the correct tax or $5,000. However, the
amount of the understatement is reduced to the extent the
understatement is due to:
- Substantial authority, or
- Adequate disclosure and a reasonable basis.
Whether there is or was substantial authority for the tax treatment
of an item depends on the facts and circumstances. Consideration will
be given to court opinions, Treasury regulations, revenue rulings,
revenue procedures, and notices and announcements issued by the IRS
and published in the Internal Revenue Bulletin that involve
the same or similar circumstances as yours.
The understatement may also be reduced if you have adequately
disclosed the relevant facts about your tax treatment of an item. To
make this disclosure, use
Form 8275, Disclosure
Statement. You must also have a reasonable basis for treating
the item the way you did.
In cases of substantial understatement only, items that meet the
requirements of Revenue Procedure 97-56 (or later update) are
considered adequately disclosed on your return without filing Form
Use Form 8275-R, Regulation Disclosure
Statement, to disclose items or positions contrary to
You will not have to pay a penalty if you show a good reason
(reasonable cause) for the way you treated an item. You must also show
that you acted in good faith.
You may have to pay a penalty of $500 if you file a frivolous
return. A frivolous return is one that does not include enough
information to figure the correct tax or that contains information
clearly showing that the tax you reported is substantially incorrect.
You will have to pay the penalty if you filed this kind of return
because of a frivolous position on your part or a desire to delay or
interfere with the administration of federal income tax laws. This
includes altering or striking out the preprinted language above the
space provided for your signature.
This penalty is added to any other penalty provided by law.
The penalty must be paid in full upon notice and demand from IRS
even if you protest the penalty.
If there is any underpayment of tax on your return due to fraud, a
penalty of 75% of the underpayment due to fraud will be added to your
The fraud penalty on a joint return does not apply to a spouse
unless some part of the underpayment is due to the fraud of that
Failure to supply social security number.
If you do not include your social security number (SSN) or the SSN
of another person where required on a return, statement, or other
document, you will be subject to a penalty of $50 for each
failure. You will also be subject to the penalty of $50 if you
do not give your SSN to another person when it is required on a
return, statement, or other document.
For example, if you have a bank account that earns interest, you
must give your SSN to the bank. The number must be shown on the Form
1099-INT or other statement the bank sends you. If you do not
give the bank your SSN, you will be subject to the $50 penalty. (You
also may be subject to "backup" withholding of income tax. See
You will not have to pay the penalty if you are able to show that
the failure was due to reasonable cause and not willful neglect.
Failure to furnish tax shelter registration number.
A person who sells (or otherwise transfers) to you an interest in a
tax shelter must give you the tax shelter registration number or be
subject to a $100 penalty. If you claim any deduction, credit, or
other tax benefit because of the tax shelter, you must attach
Form 8271, Investor
Reporting of Tax Shelter Registration Number, to your return to
report this number. You will have to pay a penalty of $250 for each
failure to report a tax shelter registration number on your return.
The penalty can be excused if you have a reasonable cause for not
reporting the number.
You may be subject to criminal prosecution (brought to trial) for
actions such as:
- Tax evasion,
- Willful failure to file a return, supply information, or pay
any tax due,
- Fraud and false statements, or
- Preparing and filing a fraudulent return.
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