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May 6, 2009 / Filed under: Tax, TaxACT

Quite often it's necessary to submit an amended tax return to the IRS, in case something was inadvertently left off your original tax return.

In my case, I submitted my return back in February, then purchased a new home, so was able to qualify and take advantage of the First-Time Homebuyer Credit.

Using TaxACT, submitting an amended federal return is pretty straight-forward, although there were a few areas that could have been improved. In general, it should be noted that if you're accustomed to filing electronically, there is currently no way to submit an amended return other than using "snail mail" with envelopes and stamps. Turns out it's not a major setback, and the process is still relatively painless.

Amend your return in TaxACT

First, make sure you've already submitted your federal return once, and received your refund (if applicable).

Next, log back into TaxACT, and go to Filing > Amend Federal Return:

TaxACT will then walk you through a couple of steps - most importantly, reminding you to print (or save a PDF) of your original 1040 that you previously submitted. Because you will be going back and changing your tax return information in TaxACT, it's important to have a hard-copy of your original return, before you make changes.

Change your return in TaxACT

Once you have a hard-copy of your original return saved somewhere, you can proceed to change your return information in TaxACT. Find the appropriate section of the software that needs to be changed. For me, it was navigating to the Federal Q&A > Other Credits section:

Here I was able to supply information on my home purchase, which then adjusted my federal income return dollar amount, as if I was doing this whole process for the first time.

Go back to Amend process

The trick is, though, you're not doing this for the first time, so when you're done making the necessary changes, do not proceed to the end of the process like you did the first time. Simply go back to Filing > Amend Federal Return.

Then, click through past Step 2 to Step 3:

You will then be asked information required to complete form 1040X. Use your original tax return for reference.

Explanation of Changes: can be confusing

When you get to the end of the process - the "Explanation of Changes" section, you'll be asked to supply information from form 1040X, related to the specific change(s) you made to your return.

This is where things got confusing for me. It was asking me to "Enter the line number from Form 1040X." I didn't have form 1040X yet. I was still going through the process to create it. It hadn't asked me to print a copy of the form yet. So, I entered the line number from Form 1040 (not X - my original return) indicating where I made the change:

69: First time home buyer credit

It turns out this is not a huge deal. When you finally print form 1040X, you can always pencil in changes, or cross something out.

However, TaxACT could have explained this process better, rather than making the user "guess" at things.

Pencil adjust printed form 1040X

Finally, you should be set to print form 1040X. When you print it, look towards the bottom where it lists your "explanation of changes."

You may have to adjust the line number, if you included one. Here I included line number 69, which is the line from my original tax return (1040). However, form 1040X is not identical to form 1040, so the line numbers are different.

So I simply crossed out the "69" portion, and penciled in the correct line number from form 1040X.

Don't forget to print related forms!

So you have form 1040X printed and corrected - so you're all set, right? Wrong. You need to also print any related forms that are necessary for any changes that involve adjusted credit. In my case, I needed to print form 5405, which is the "First-Time Homebuyer Credit" form.

Again, TaxACT did not effectively inform me of this. I believe there was a couple of mentions, but nothing "in my face" so I couldn't possibly overlook it.

Without supplying the IRS with form 5405, they would have no proof that I actually purchased a home. Form 1040X doesn't prove it - it just states the change.

In the end, TaxACT was mostly helpful in letting me quickly amend my federal tax return.