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How to file an amended tax return for 2007

how to file an amended tax return for 2007

By Sandra Block, USA TODAY

You know that dreadful feeling you get when you've locked your car, only to realize the keys are still in the ignition? That's how a lot of people felt this year when they learned, after they filed their tax returns, that they were eligible for a telephone excise-tax refund.

This one-time tax refund ranges from $30 to $60, depending on the number of exemptions. Just about everyone who has a phone qualifies for it (see box). Still, millions of taxpayers, particularly those who filed early, failed to claim the credit, the IRS says. Even more troubling, about half the early returns that omitted the credit had been filed by a paid tax preparer.

Fortunately, you don't need a wire hanger to reopen your tax return. You can claim a phone tax refund, or any other credit or deduction you overlooked the first time around, by filing an amended return. And filing one is easier than you might think, says Bob Scharin, senior tax analyst for RIA-Thomson Tax & Accounting.

To file an amended return, you need your original tax return and Form 1040X, available at Form 1040X has three columns. In the first column, copy the figures you reported on your original tax return. In the second column, show any changes on your return. In the third column, write the correct amount.

If the only change to your original return is the phone tax refund, the process is straightforward. Enter the amount of your credit on Line 15 of the form. (The IRS revised Form 1040X in February to reflect the credit, so make sure you use the updated version.) Then, subtract the credit from the amount of tax you computed on your original return.

A tax preparer can file an amended return, but the preparer's fees will likely exceed the amount of the phone tax refund. If you used a preparer who failed to claim the refund, the preparer shouldn't charge to file an amended return, Scharin says. If your preparer is uncooperative, take your business elsewhere. "The reason you're going to a professional is to get someone who knows the law," Scharin says.

The check is in the mail

Some tax software programs include a program for filing an amended return, but you'll still have to print out the form and mail it. Form 1040X is one of the few forms that can't be filed electronically with the IRS. Electronic deposit isn't available, either. If you're due a refund, you'll have to wait for the IRS

to mail you a check.

It can take the IRS up to 12 weeks to process your amended return, according to tax publisher CCH.

Other tips for filing an amended return:

•The IRS recommends waiting at least three weeks after you e-file your original return, or eight weeks after you file a paper return, before submitting an amended return.

"You want to make sure the IRS processes them in appropriate order," Scharin says. The IRS "can't figure out if an amended return is correct until they have the original return in the system."

•Don't file an amended return if you discover you made a math error on your original return, or failed to attach some documents. Many of these errors are caught by the IRS when it processes returns. In that case, the IRS will automatically adjust your refund to reflect the correct amount. If documents are missing, the IRS will contact you.

Other reasons to make amends

Other errors that could justify an amended return:

•You overlooked deductions that were enacted by Congress late last year. Those deductions weren't included on paper tax returns mailed in January because they were enacted after the IRS sent 2006 forms to the printer. The deductions include a tax deduction worth up to $4,000 for college tuition and fees; a $250 deduction for educators who spend their own money on classroom supplies; and a deduction for state and local sales taxes. Tax software was updated to include those deductions, but taxpayers who filed on paper might have overlooked them.

•You failed to report all your dividends, interest or capital gains. This usually happens when taxpayers overlook a Form 1099 from their financial institutions. While it's tempting to hope the IRS won't notice, that's a risky strategy, says John Roth, senior tax analyst at CCH. The IRS receives copies of all Form 1099s; if the amount on a 1099 it receives differs from what you've reported, it will send you a bill for the difference, plus any interest and penalties that have accrued since the tax deadline.

Attach the check to your Form 1040X, and make copies of the check and the amended return for your records. Since April 17 has already passed, you may get a bill from the IRS for interest and penalties, Roth says. But the sooner you pay, the less you'll owe.

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: .

Category: Taxes

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