How do I file an amended return with form 1040X?
I filed my 2017 IRS return under married filing joint.Wages $ 17,021 + Social Security benefits $7,505. Assuming Social benefits not taxable, the total taxable income was $17,021 which was under deduction limit of $18,650. So I got refund of $538 as shown in my W-2 for 2017. I made an error not showing my Social Security benefits which was $18,352. So total income was $17021[as per W-2] +$25,857 [as per social $18,352 + $7,505 ] totalling to$42,878 which was more than allowable limit.I have already received the refund of $538 on the taxes I paid as per W-2. Please advise how to file 1040X return. Thanks
Joshua Escalante Troesh, CFP | MBA
The IRS provides directions for filing a 1040X on their website, although, as with all things IRS, they aren't always the easiest to follow. I highly recommend engaging a qualified tax professional, such as a CPA, to assist you with your taxes. Since you have a significant underpayment of taxes for the prior year, you will want to have professional guidance to minimize penalties (the IRS doesn't generally lower interest charges).
Hiring a CPA is Cheap
The cost of a good CPA is minimal, and amounts to only a couple hundred dollars for simple tax returns. Many people cost themselves thousands of dollars from overpaying taxes in an attempt to save a few hundred dollars when filing taxes.
Explore VITA
The IRS also has a Volunteer Income Tax Assistance program for the disabled, those with low income, those with limited english skills, and other groups. You may qualify for free professional tax advice through VITA. Realize, however, that not all VITA volunteers are skilled tax preparers and you may still want to hire a CPA to reduce or eliminate penalties.
Minimizing Multi-Decade Taxes
If your financial situation is more complex, you should also consider working with a fiduciary & fee-only financial advisor. Forward-looking tax planning can significantly lower your multi-decade tax liability, especially if you have money in retirement accounts such as IRAs or 401(k)s. Advanced planning strategies such as Roth conversions, tax-efficient asset location, and tax-efficient withdrawal ordering can significantly increase the after-tax money available to you in retirement.