What to Know About IRS Deadlines for 1040-X

If you’re just joining us, go back to the first three columns in this series. There, you’ll find an overview of the basics of Form 1040-X, Amended U.S. Individual Income Tax Return, formerly Form 1040X. I also offered advice on how to submit a 1040-X.

The Internal Revenue Service sets deadlines for filing 1040-Xs. The statute of limitations, legal lingo for deadline, limits the time when both filers and the agency can make changes. These time limits are fairly liberal. As a general rule, the deadline for submission of 1040-X is (1) three years from the date (including any filing extension) of the filing of the original 1040, or (2) two years from the time the filer paid the tax, whichever is later (Code Section 6511(a)). 

The feds will treat a 1040 that is filed early as though it was filed on the due date. For example, if a filer wants to correct an erroneous 1040 for 2020 that she filed in February of 2021, the cut-off date for filing a 1040-X would typically be April 15, 2024.

Suppose, however, that she obtained an automatic six-month extension of the filing deadline from April 15, 2021, to Oct. 15, 2021, and she filed before the deadline and paid the tax due. If the IRS received her 1040 on July 1, 2021, for example, then the three-year limit in this case means that the 2020 return can be amended until July 1, 2024.

There have been many court cases in which the court sided with the IRS and held that taxpayers forfeited refunds solely because they waited too long. In fact, courts have denied refunds to taxpayers who missed the deadline by only a day or two.

Keep in mind that the three-year window doesn’t apply to everyone. As with so many other code provisions, there are important exceptions. One of them authorizes relief for persons who are “physically or mentally unable to manage their financial affairs.” Congress crafted the tax code to require the IRS to extend the cut-off date if the taxpayer seeking a refund has a serious physical or mental impairment, such as senility or chronic alcoholism, which can be expected to result in death or which has lasted or can be expected to last longer than 12 consecutive months.

For a joint return, only one spouse has to be “financially disabled.” But the IRS invokes the general rule and denies an extension when the person who has a disability has a spouse or someone else authorized to act on his or her behalf in financial matters––an agent named under a durable power of attorney, to cite a common example (Code Section 6511 (h)).

Another exception makes it possible for a filer to go back more than three years. The deadline is extended when a filer forgot to take deductions for bad debts or worthless securities or it took some time to determine the year in which a debt became uncollectible or a stock actually became worthless. In those cases, she has seven years to submit a 1040-X (Code Section 6511 (d)).

What’s next. More in subsequent columns on other aspects of 1040-X.