When new information affects your tax liability, such as missed deductions, additional income, or a cost segregation study that unlocks major depreciation, you may need to file an amended tax return. But how long do you have to make those changes before it’s too late?
Understanding the IRS deadlines for amended returns is critical, especially when you are claiming additional tax benefits or refunds. Here is what every taxpayer, CPA, and commercial property owner needs to know.
What Is an Amended Tax Return and When Should You File One?
An amended tax return allows you to correct or update a previously filed return. Common reasons to amend include:
- Claiming missed deductions or credits
- Correcting income, filing status, or dependents
- Applying new tax strategies such as accelerated depreciation from a cost segregation study
- Claiming energy-efficient tax deductions like Section 179D
- Fixing calculation or reporting errors
Amended individual returns are filed using Form 1040-X. Businesses amend using different forms depending on their entity type (ex: 1120-X for corporations).
IRS Time Limits for Amending a Tax Return
The IRS sets strict deadlines for when an amended return is eligible for a refund. Once the deadline passes, you can still amend in some cases, but you will not receive a refund or credit.
The Three-Year and Two-Year Rules Explained
The IRS amendment deadlines operate under two core rules:
The Three-Year Rule
You have three years from the original filing date of the tax return to amend and request a refund.
- If you filed early, the IRS still counts the deadline from the official due date; usually April 15.
- If you filed late with an extension, the deadline is based on the actual filing date.
The Two-Year Rule
If you paid tax later than the filing date, you have two years from the date you paid the tax to file an amended return, even if the three-year window has already expired.
Whichever date is later, three years from filing or two years from payment, is your deadline.
Exceptions and Special Circumstances
Some situations extend or override the standard deadlines:
| Situation | Special Rule |
|---|---|
| Claiming a bad debt or worthless security | 7-year deadline |
| Amending due to disaster relief | Deadlines may be extended by IRS declaration |
| Claiming a foreign tax credit or deduction | 10-year deadline |
| Cost segregation look-back studies | Still limited by 3-year/2-year rule unless Form 3115 is used |
| Net Operating Loss carrybacks | Different filing timelines apply |
Important for CSSI clients: When using Form 3115 to make an accounting method change, taxpayers can capture missed depreciation without amending past returns, even beyond the 3-year rule. This is why “look-back” cost segregation is still possible for older properties.
Steps to File an Amended Return (Form 1040-X)
- Gather the original return and supporting tax records
- Prepare corrected numbers (for example, updated depreciation schedules)
- Complete Form 1040-X and include all schedules and forms that changed
- Attach any required statements (ex: cost segregation study report)
- Submit electronically or by mail (e-filing now allowed for many years)
- Track progress using the IRS “Where’s My Amended Return?” tool
Processing Time and What to Expect From the IRS
- Amended returns typically take up to 20 weeks to process
- Paper-filed amendments may take longer
- Refunds are issued by check, not direct deposit
- You cannot call the IRS to speed it up, but you can check status online
Conclusion
Amending a tax return can lead to substantial refunds, especially when retroactively applying cost segregation, 179D, or other high-value deductions. But timing matters. The IRS generally gives taxpayers three years from filing or two years from payment to amend and claim a refund.
If you have property that was placed in service in a past tax year and you haven’t taken full advantage of accelerated depreciation, CSSI can help determine whether an amended return or a Form 3115 change is the best path to maximize your tax benefit. Contact us today!
