A Guide to Amended Tax Returns

Whether a taxpayer has minor or major changes to a tax return that has already been filed, fixing the return can be complicated. Taxware Systems is here to help. Here is a quick guide to help you create an amended return using our software.

First, here are a few things you need to know:

When to Amend: You should amend a tax return when you need to correct a filing status, add or remove dependents or change total income. Another reason to amend would be to claim deductions or tax credits that you missed on the original tax return.

When NOT to Amend: Sometimes you do not need to amend the tax return. The IRS will correct some mistakes, such as math errors, for you. If you forgot a required form or schedule, the IRS will send you a notice about the missing forms.

Form 1040X: Use a Form 1040X to amend a tax return that has already been filed. The 1040X has three columns. Column one should have the amounts from the original return, column two should have the increases or decreases (changes) that you are making to the return, and column three should have the corrected amounts. Make sure to explain the reasons for the changes on the back of the form.

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When you are ready to amend a return with the Taxware Systems software, pick the return from the Recall Current list and go to the Summary Menu. On the right hand side of the page, click on the [23] 1040X Amended button and instructions will appear.

Before you amend the return, make sure that the current data matches the return at the time it was originally filed. Once that has been verified, click on Save Current as Original. Then, make the necessary changes to the return. After the return has been adjusted, return to the amended instructions and click on Calculate/Adjust/Explain to write notes about the changes made on the return. Finally, print the 1040X. Note: An amended return cannot be electronically filed. You must file the return on paper.

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Child Tax Credit: A Guide

This year the IRS has expanded due diligence questions concerning the Child Tax Credit to make sure that taxpayers and their children qualify for the credit. Here is a short guide to help tax professionals navigate this important credit.

Amount: The Child Tax Credit may help reduce federal income tax by $1,000 for each qualifying child claimed.

Additional Child Tax Credit: If the client qualifies for Child Tax Credit but gets less than the full amount, they could receive a refund, even if they owe no tax, through the Additional Child Tax Credit. This year, tax returns claiming Earned Income Credit and Additional Child Tax Credit that have refunds will be held by the IRS until February 15th.

Qualifications: There are many tests that the child must pass to qualify for the credit, including:

  • The child must be under age 17 at the end of the year.
  • The child must be the dependent and relative of the client.
  • The child cannot file a joint return for the year, unless they are filing only to get a refund.

There are several other qualifications as well. For more information on special rules and limitations for the Child Tax Credit, please visit www.irs.gov.

To find the expanded due diligence questions in the Taxware Systems software, fill out the basic information on a client and click “Line Input” on the left hand side. Once there, you will see the Form 1040. On the far left above the automatic calculations is a large button with Due Diligence and a red X. Click on the button and the questions that need to be answered will be in red. Once those questions are answered, a green check mark will appear if the client qualifies for the credit.

Schedule 8812: If the client qualifies to claim the Child Tax Credit, make sure to check whether they need to fill out Form 8812. The same also goes for the Additional Child Tax Credit; the client will need to fill out Form 8812.

If you have questions, feel free to contact us!