How do you fix an error you find on your previous taxes?

[Jaayse]

While putting together my taxes for this year I noticed that my last year taxes did not have the $5,500 adjustment for my Traditional IRA contributions.  I don't know how I missed this last year, but I know the form is a 1040X to fix it.  The question is, can I file this somehow with this years tax returns on H&R Block?  Is there some way to just bundle it all together?  Also why didn't the tax preparation software pick up this problem?  If it makes any difference I am using the "Premium" software (I'm not paying for it because it is free to military).

I had to fill out all my previous year IRA contributions on this years tax form and it did not mention anything about the incongruency, although last years taxes were a bit strange.  I was on a deployment and filed late, and although I considered using a human tax preparer, I decided to do it myself.  Unfortunately my mother (trying to be helpful) had contacted her tax guy and gave him my social security number to file for a tax extension for me even though I told her I automatically had one as a military member.  This caused me to have to send in my finished taxes on H&R block by snail mail since I already had a return filed on my behalf. 

Also, as a bonus question, how do you manage to get the government to not keep so much money?  I pulled in around 105k this last year and had around a combined 7k held for state and federal taxes.  I am now getting around 6k of that back (due to combat zone tax exemption for some months, 5.5k tIRA, 15k in deductions, and around 12k tTSP).  I'm single and can only claim a max of 1 deduction (or whatever that is called) right?

[G-dog]

I think you will file the amended return separately.

Since it may affect your numbers for this year - I would file the amended return for 2016 first. Then file the returns for 2017.  The most cautious option would be to wait until the amended return is processed before filing 2017 - but I honestly don’t know how the IRS or state may prioritize processing returns.

Sounds like you want to adjust your withholding - you do that on your W-4 form.  You can change to zero deductions, I think they will withhold less per paycheck then.

[Sibley]

Amended 1040X for 2016 is filed separately from 2017 taxes. You may be able to use the software, but you might need last year's software. You can do them at the same time, but if you're mailing then you mail in separate envelopes. I do not believe you can efile a 1040X.

Re withholding - you need to adjust your W4. The number of deductions isn't like it is on the tax forms. You can do however many you need. I believe that the case study spreadsheet has a section that can help you figure out what is appropriate. Otherwise, google W4 calculations or similar. G-dog, you're backwards. The more deductions you have the less withheld. IE, 1 deduction $10 is withheld, 2 is $8 (totally made up numbers).

[G-dog]

Amended 1040X for 2016 is filed separately from 2017 taxes. You may be able to use the software, but you might need last year's software. You can do them at the same time, but if you're mailing then you mail in separate envelopes. I do not believe you can efile a 1040X.

Re withholding - you need to adjust your W4. The number of deductions isn't like it is on the tax forms. You can do however many you need. I believe that the case study spreadsheet has a section that can help you figure out what is appropriate. Otherwise, google W4 calculations or similar. G-dog, you're backwards. The more deductions you have the less withheld. IE, 1 deduction $10 is withheld, 2 is $8 (totally made up numbers).

Dammit, I knew I could have that backwards!
With the change in the tax laws - you may want to adjust your W-4 anyway.

[Lucky Recardito]

While putting together my taxes for this year I noticed that my last year taxes did not have the $5,500 adjustment for my Traditional IRA contributions. // I pulled in around 105k this last year

If your 2016 income was in this same range, you might have been over the income limit to deduct Traditional IRA contributions (which is why it would have looked to you like your software "forgot" it; if you plugged in those contributions but were over the limit, the program would have known this and bypassed the deduction).

https://www.fool.com/retirement/2016/11/05/ira-income-limits-for-2016-and-2017.aspx -- looks like for 2016, the phase-out started at $61K and ended entirely at $71K. Check what your AGI was on your 2016 return -- if it was over $71K, then that Trad IRA contribution is not deductible so there's no need to file an amended return. (And going forward, use a Roth IRA instead!)

And as Sibley said, you can INCREASE the # of allowances on your W-4 to have less $$ withheld. What you put on your W-4 is totally up to you. I suggest sitting down and estimating your total 2018 tax bill now, then comparing that to what you're having withheld (multiply across through the year). Use the 2018 withholding tables (https://www.irs.gov/pub/irs-pdf/n1036.pdf) to decide how many allowances you want to put on your W-4 to get you closer to the number you're expecting.

[Jaayse]

My income last year was a little lower pre-tax, but my AGI for this year is only around 36k and last year was 49.5k, both well within the 71k for the tIRA contributions.  I spend a lot of time in not so nice areas of the world, so the tax benefits are nice.

So it is ok for me to claim more allowances than what a single person is supposed to claim? 

Also it sounds like the order of the forms being turned in does not matter if I am reading the advice correctly.

[Lucky Recardito]

My income last year was a little lower pre-tax, but my AGI for this year is only around 36k and last year was 49.5k, both well within the 71k for the tIRA contributions.  I spend a lot of time in not so nice areas of the world, so the tax benefits are nice.

Makes sense. Then yes, file that 1040X and deduct that income!

So it is ok for me to claim more allowances than what a single person is supposed to claim?

Yep. Do what works for your situation -- the W-4 provides starter guidelines only. You don't have to do what it suggests.

Also it sounds like the order of the forms being turned in does not matter if I am reading the advice correctly.

I don't think so! Other posters have noted that you have to file the 1040x (the amended return) by mail, on paper, which matches my understanding as well. But I don't think you have to wait and stagger anything -- prepare your 2016 1040X and your 2017 return whenever you want, and submit away!

[BTDretire]

One year I moved a number to a form that was $11,100 and put $1,100.
I filed my taxes with the $1,100 number.
Then months later I was doing some other calculations and noticed the error.
 I went to my accountant to file the ammended return. Which he did.
 He also commented, I don't think I have any other clients that would bring this to my attention.

[charis]

So it is ok for me to claim more allowances than what a single person is supposed to claim? 

I don't think you are looking at this correctly.  You should only withhold what you owe (or slightly more or less) based on your circumstances, and being single is only one factor.    Google a "withholding calculator" to estimate how many allowances you should be claiming.

[Jaayse]

"Under penalties of perjury, I certify that I am entitled
to the number of withholding allowances claimed."

The following is the message I get when I try to put more than 1 exemption with "single" selected.  I suppose this message has been keeping me honest and letting them keep my money.  I work for the government so it would be a little silly of me to think that they wouldn't have that on record.  I know that many other people claim more, but do they have to definitively say "yes" to a statement like this in order to do so?

Anyways, I looked into the 1040X on H&R Block, they do let you file them, but only for the current year.  When I tried to add that form to my data it gave me the message that I had not yet filed my taxes for this year so I could still change them.  It looks like I missed the window to put it in for last year, but I didn't know until I was doing taxes for this year.  I suppose I need to figure out how to fill in the form on my own.  Hopefully it isn't too complicated, but I doubt it will be that easy.

[charis]

Keeping you honest? There's nothing dishonest about claiming the allowances to which you are entitled. Did you even look at the withholding calculator?  And i just filed an amendment for 2016, you haven't missed it.

[ISawTheLight]

It may not actually be an error on your prior year return.  If you are a participant in another retirement plan (which it seems you are), you may not be able to deduct contributions to an IRA.  This is not dependent upon AGI, but on Modified AGI.  I know that one of the addbacks to calculate Modified AGI is the foreign income exclusion...is that how your combat pay is reported on your return? If you're filing Form 2555 for your combat pay, then you are getting the FIE.  If that's the case, it is possible that your Modified AGI is above the limits, and the deduction may be limited or disallowed.  (Take a look at Worksheet 1.1 on the top of page 15 of IRS Publication 590.)

If it truly is an error and you need to amend, you should file 1040X.  You can file this any time within three years of the due date of the original return.  I would e-file my 2017 return to get the refund coming, and then paper file the amended 2016 return afterwards.  Also, I would attach documentation to the amended return proving that I made a 2016 IRA contribution - this could be something from your IRA provider or perhaps a Form 5498 if you have it (this is a tax form that your provider should have sent out indicating what IRA contributions you made for the year).  I like to give the IRS everything they need to approve the refund right away (i.e. I don't want them to have to send me a letter asking for more stuff in order to approve it).