Can You Amend a Federal Return After an Audit?

Learning Amended Returns and Audits

An amended return is a corrected tax return filed with the IRS to correct errors or omissions in a previously submitted tax return. Conversely, an audit is an examination process by the IRS to verify tax returns are accurate and by federal laws. Occasionally, after an audit has been finalized, taxpayers may find additional information or realize changes that were not covered. This brings up a general question: Can you correct your return once it's already been audited?

Is It Legally Permitted to Correct a Return After an Audit?

Yes, it is legally permitted to correct a federal return even after an IRS audit has occurred. However, it must be done within the statute of limitations—typically three years from the original filing date or two years from the date the tax was paid, whichever is later. If the audit is still open, or if the IRS has already made adjustments, any amendment must consider those changes. It’s essential to ensure your amendment doesn’t conflict with the audit findings unless you’re providing valid justification.

Reasons for Making Amendments Following an Audit

There are a few legitimate reasons to correct a return after an audit. You might find records in favor of additional deductions or credits you didn't consider. Or the IRS might have overlooked a mistake in your favor during the audit, and you have to file an amendment. Taxpayers also get missing tax information—like K-1s or corrected 1099s—after an audit is finished, which might require updating their tax returns.

Steps to Correct a Federal Return Following an Audit

To correct your federal return, you will need to complete Form 1040-X, the IRS's official form for correcting a previously submitted return. Attach a clear explanation of each correction, with supporting documentation such as audit reports or recently found records. Explain clearly why the correction is being made and how it correlates with the findings of the audit. Send the signed form to the indicated IRS address in the instructions, or electronically file it if qualified.

Will Amending After an Audit Cause Another Audit?

Amending a return won't necessarily initiate another audit, but it can trigger additional IRS attention if the changes create red flags or contradict the conclusions of the audit. An example is claiming huge new deductions or altering income numbers drastically without strong documentation. To avoid such a risk, see to it that your amendment is accurate, consistent, and well-documented. Preparing with the assistance of a tax professional can also bolster your argument.

The Role of a CPA in Post-Audit Amendments

Using a Certified Public Accountant (CPA) is strongly advised when making a change to a return following an audit. A CPA can review the audit report carefully, cross-check it against your tax documents, and assist in determining legitimate grounds for amendment. They will also prepare and document your amended return correctly, reducing the likelihood of further scrutiny. Additionally, should there be additional questions raised by the IRS, your CPA can represent you and speak on your behalf.

Should You Amend or Not?

It should be a well-thought-out decision to amend a return after an audit. If the changes are significant to your tax liability or address significant errors, then it is worth doing. But if the benefits are slight and there is a high risk of further examination, then it may be advisable to consult a tax professional first. In either event, being proactive, open, and compliant will serve to keep your post-audit tax status in good standing.