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How to Safely Amend a Tax ReturnAmending (changing) a tax return is actually a pretty straightforward process. According to the instructions provided by the IRS, a taxpayer is allowed to amend a prior year tax return for the following reasons:
- To correct a previously filed tax return.
- To make certain tax elections that are way beyond the scope of this article as they pertain to very few taxpayers.
- To change amounts, except penalties and interest, that have been already adjusted by the IRS.
- To make a claim for a carryback due to a loss or unused credit. Certain tax benefits incurred in the current tax year may not be allowed by the IRS but can be carried back to a prior year (or carried forward to a future year which does not require amending a return) when the benefit may have qualified. The most common carryback is due to a net operating loss for the current year that can be offset against income in a prior year to reduce that year’s tax liability.