The IRS will correct common errors during processing. However, there are certain situations in which a taxpayer may need to file an amended return to make a correction. Taxpayers can now file amended returns electronically. Here are some tips for anyone who discovered they made a mistake or forgot to include something on their tax return.

Use the Interactive Tax Assistant. Taxpayers can use the Should I file an amended return? to help determine if they should file an amended tax return.

Don’t amend for math errors or missing forms. Taxpayers generally don’t need to file an amended return to correct math errors on their original return. The IRS may correct math or clerical errors on a return and may accept it even if the taxpayer forgot to attach certain tax forms or schedules. The IRS will mail a letter to the taxpayer, if necessary, requesting additional information.

Wait until receiving refund for tax year 2019 before filing. Taxpayers who are due refunds from their original tax year 2019 tax return should wait for the IRS to process the return and they receive the refund before filing Form 1040-X to claim an additional refund.

File Form 1040-X to amend. Taxpayers must file using Form 1040-X, Amended U.S. Individual Income Tax Return, to correct their tax return. If they are filing an amend 1040 or 1040-SR for 2019, they can now file electronically using commercial tax-filing software. All other amended returns must still be mailed to the IRS. When filing, taxpayers should indicate the year of the original return and explain all changes made by attaching any forms or schedules. Taxpayers then sign and mail the Form 1040-X to the address listed in the instructions. Taxpayers filing Form 1040-X in response to an IRS letter should mail it to the address shown on the letter.

Amend to correct errors. Taxpayers should correct their return if they find that they should have claimed a different filing status or didn’t report some income. Taxpayers who claimed deductions or credits they shouldn’t have claimed or didn’t claim deductions or credits they could have claimed may need to file an amended return. Changes made on a federal return may also affect state taxes. The taxpayer should contact the state tax agency to see if this is so.

Pay additional tax. Taxpayers who will owe more tax should file Form 1040-X and pay the tax as soon as possible to avoid penalties and interest. They should consider using IRS Direct Pay to pay any tax directly from a checking or savings account for free.

File within three-year time limit. Taxpayers generally have three years from the date they filed their original tax return to file Form 1040-X to claim a refund. They can file it within two years of the date they paid the tax, if that date is later.

Use separate forms if amending more than one tax year. Taxpayers must file and submit a separate Form 1040-X for each tax year to avoid confusion. They should check the box for the calendar year or enter the other calendar year or fiscal year they are amending. The form’s instructions have the mailing address for the amended return.

Track amended return status online. Taxpayers can track the status of their amended tax return in English and Spanish using Where’s My Amended Return? Amended returns take up to 16 weeks to process and up to three weeks from the date of mailing to show up in the system. Before that time, there’s no need to call the IRS unless the tool specifically tells the taxpayer to do so.

• Subscribe to IRS Tax Tips

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Due to the Coronavirus pandemic, millions of Americans received or are currently receiving unemployment compensation, many of them for the first time. It’s important for these individuals to know that unemployment compensation is taxable.

People can have taxes withheld from this compensation now to help avoid owing taxes on this income when they file their income tax return next year.

By law, these benefits are taxable and must be reported on a federal income tax return for the tax year it was received. Taxable benefits include any of the special unemployment compensation authorized under the Coronavirus Aid, Relief, and Economic Security Act.

Withholding is voluntary

Federal law allows recipients to choose a flat 10% withholding from these benefits to cover part or all their tax liability. To do this, recipients should complete Form W-4V, Voluntary Withholding Request, and give it to the agency paying their benefits. Don’t send the form to the IRS. If the paying agency has its own withholding request form, use it instead.

Recipients who don’t choose voluntary withholding, or if the withholding isn’t enough, can make quarterly estimated tax payments. The payment for the first two quarters of 2020 was due on July 15. Third quarter is due September 15, 2020 and fourth quarter on January 15, 2021. Taxpayers can visit IRS.gov to view all payment options.

Here are other types of payments taxpayers should check for withholding

• Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund
• Railroad unemployment compensation benefits
• Disability benefits paid as a substitute for unemployment compensation
• Trade readjustment allowances under the Trade Act of 1974
• Unemployment assistance under the Disaster Relief and Emergency Assistance Act of 1974
• Unemployment assistance under the Airline Deregulation Act of 1978 Program

Recipients who return to work before the end of the year can use the IRS Tax Withholding Estimator to make sure the right amount of tax is taken out of their pay. This online tool is available only on IRS.gov, and it can help workers or pension recipients avoid or lessen year-end tax bills or can estimate a refund.

Reporting unemployment compensation

In January 2021, unemployment benefit recipients should receive a Form 1099-G, Certain Government Payments, from the agency paying their benefits. This form will show the amount of unemployment compensation received during 2020 and any federal income tax withheld. Taxpayers should report this information, along with other income, on their 2020 federal tax return.

More information:

• Form 1040-ES, Estimated Tax for Individuals
• Publication 505, Tax Withholding and Estimated Tax
• Publication 525, Taxable and Nontaxable Income
• Subscribe to IRS Tax Tips

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The October 15 filing deadline for taxpayers who requested an extension to file their 2019 tax return is quickly approaching. Taxpayers should remember they can file whenever they’re ready and don’t have to wait until Thursday, Oct 15.

These tools are available at IRS.gov to help people with their taxes:

• IRS Free File and other electronic filing options. Taxpayers can file their tax return electronically for free through IRS Free File. Other electronic filing options include using a free tax return preparation site, commercial software or an authorized e-file provider.
• Direct deposit for refunds. The fastest way for taxpayers to get their refund is to file electronically and use direct deposit. Refunds can be deposited in up to three accounts. Taxpayers can also use their refunds to purchase up to $5,000 in U.S. Series I Savings Bonds.
• Online payment options. If an extension filer owes taxes, they should pay as much as possible by the Oct. 15 deadline to reduce interest and penalties. IRS Direct Pay allows individuals to securely pay from their checking or savings accounts. Visit IRS.gov for additional payment options.
• Account information and tax records. Individual taxpayers can visit IRS.gov to manage their account. This includes viewing their balance and payment history, paying taxes and accessing tax records through Get Transcript.

These people may have more time to file their tax return:

• Military members serving in a combat zone or a contingency operation in support of the Armed Forces generally get more time to file.
• People who have a valid extension and are in – or affected by – a federally-declared disaster may be allowed more time to file.

Taxpayers should keep a copy of their tax return and all supporting documents for at least three years.

• Subscribe to IRS Tax Tips

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Some taxpayers earn income not subject to withholding. For small business owners and self-employed people this can mean making quarterly estimated tax payments.

Here are some important things taxpayers should know about estimated tax payments:

• Taxpayers generally must make estimated tax payments if they expect to owe $1,000 or more when they file their 2020 tax return.
• Aside from business owners and self-employed individuals, people who might also need to make estimated payments includes sole proprietors, partners and S corporation shareholders. It also often includes people involved in the sharing economy.
• Estimated tax requirements are different for farmers and fishermen.
• Corporations generally must make these payments if they expect to owe $500 or more on their 2020 tax return.
• The remaining deadlines for paying 2020 estimated taxes are September 15, 2020 and January 15, 2021.
• Taxpayers can review these forms for help figuring their estimated payments:
  • Form 1040-ES, Estimated Tax for Individuals
  • Form 1120-W, Estimated Tax for Corporations

• Taxpayers have options for paying estimated taxes. These include:
  • Direct Pay from a bank account.
  • Paying by credit or debit card or the Electronic Federal Tax Payment System.
  • Mailing a check or money order to the IRS.
  • Paying cash at a retail partner.

Taxpayers who don’t pay enough tax throughout the year may have to pay an underpayment penalty.

Taxpayers, who have a job or a pension with federal tax withholding should check their withholding using the Tax Withholding Estimator on IRS.gov. If the estimator suggests a change, the taxpayer can submit a new Form W-4 to their employer. The estimator handles multiple sources of income and multiple jobs provided the taxpayer has a W-2 income or a pension/annuity statement.

More information:

• Publication 505, Tax Withholding and Estimated Tax
• Subscribe to IRS Tax Tips

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Whether it’s something they’ve been doing for years or something they just started to make extra money, taxpayers must report income earned from hobbies in 2020 on next year’s tax return.

What the difference between a hobby and a business? A business operates to make a profit. People engage in a hobby for sport or recreation, not to make a profit.

Here are nine things taxpayer must consider when determining if an activity is a hobby or a business:

• Whether the activity is carried out in a businesslike manner and the taxpayer maintains complete and accurate books and records.
• Whether the time and effort the taxpayer puts into the activity show they intend to make it profitable.
• Whether they depend on income from the activity for their livelihood.
• Whether any losses are due to circumstances beyond the taxpayer’s control or are normal for the startup phase of their type of business.
• Whether they change methods of operation to improve profitability.
• Whether the taxpayer and their advisors have the knowledge needed to carry out the activity as a successful business.
• Whether the taxpayer was successful in making a profit in similar activities in the past.
• Whether the activity makes a profit in some years and how much profit it makes.
• Whether the taxpayers can expect to make a future profit from the appreciation of the assets used in the activity.

Here are additional resources to help taxpayers report their income correctly. See the more information section below for additional guidance.

More Information:

• Publication 17, Your Federal Income Tax
• Publication 525, Taxable and Nontaxable Income
• Publication 535, Business Expenses
• Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C)
• Subscribe to IRS Tax Tips

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Marriage changes a lot of things and taxes are on that list. Newlyweds should know how saying “I do” can affect their tax situation.

Here’s a checklist of items for newly married couples to review:

Name and address changes

• Name. When a name changes through marriage, it is important to report that change to the Social Security Administration (SSA). The name on a person’s tax return must match what is on file at the SSA. If it doesn’t, it could delay any tax refund. To update information, taxpayers should file Form SS-5, Application for a Social Security Card. It is available on SSA.gov, by calling 800-772-1213 or at a local SSA office.
• Address. If marriage means a change of address, the IRS and U.S. Postal Service need to know. To do that, people should send the IRS Form 8822, Change of Address. Taxpayers should also notify the postal service to forward their mail by going online at USPS.com or their local post office.

 Withholding

• After getting married, couples should consider changing their withholding. Newly married couples must give their employers a new Form W-4, Employee’s Withholding Allowance within 10 days. If both spouses work, they may move into a higher tax bracket or be affected by the Additional Medicare Tax. They can use the IRS Withholding Estimator on IRS.gov to help complete a new Form W-4. See Publication 505, Tax Withholding and Estimated Tax for more information.

Filing status

• Married people can choose to file their federal income taxes jointly or separately each year. While filing jointly is usually more beneficial, it’s best to figure the tax both ways to find out which works best. Remember, if a couple is married as of December 31, the law says they’re married for the whole year for tax purposes.

Scams

• All taxpayers should be aware of and avoid tax scams. The IRS will never initiate contact using email, phone calls, social media or text messages. First contact generally comes in the mail. Those wondering if they owe money to the IRS can view their tax account information on IRS.gov to find out.

More Information:

• Topic 157, Change Your Address – How to Notify the IRS
• Subscribe to IRS Tax Tips

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