Form 1120X – Amended U.S. Corporation Income Tax Return

Why Do Corporations Use Form 1120-X?

We all make mistakes, and sometimes those mistakes happen on our tax returns. Corporations are no different. Just like individuals might need to amend their personal tax returns, corporations sometimes need to adjust their corporate income tax filings. That’s where Form 1120-X comes in. It’s a specialized form designed specifically for corporations to fix errors or make changes after they’ve already filed their initial Form 1120.

Think of it like this: imagine you submitted a report to your boss, but after submitting it, you realized you accidentally left out crucial information. Form 1120-X is the corporation’s chance to submit a revised, accurate tax report to the IRS.

When Might a Corporation Need to File Form 1120-X?

There are many reasons why a corporation might need to file an amended return. Here are a few common scenarios:

• Errors in Income: Maybe the corporation accidentally overstated or understated its income. This could be due to miscalculations, missing information from sales reports, or other accounting errors.
• Incorrect Deductions: Perhaps the corporation took a deduction it wasn’t entitled to, or maybe they overlooked a deduction they were eligible for.
• Changes in Credits: If a corporation missed claiming a tax credit, or claimed one they shouldn’t have, Form 1120-X can be used to correct it.
• New Information: Sometimes, a corporation may receive new information after filing their taxes, such as an updated 1099 form or an amended financial report. This new information may necessitate a change to the initial return.
• IRS Audits: After an IRS audit, the agency might instruct the business to file an amended return to reflect changes discovered during the audit.
• Changes in Tax Law: While less common, a retroactive change in tax law could mean a corporation needs to amend its return to take advantage of a new tax break or adjust for changes.

How Does Form 1120-X Work?

Filing Form 1120-X isn’t as straightforward as just re-submitting a new Form 1120. Here’s a step-by-step look at how it works:

1. Identify the Issue: The first step is to pinpoint the specific error or change that needs to be corrected on the original Form 1120. It’s essential to understand why you need to amend the return.
2. Gather Information: Collect all the documents, receipts, and paperwork you need to support the changes you are making. This may include updated financial statements, corrections to 1099 forms, or any other relevant documentation.
3. Complete Form 1120-X: The form will have spaces for the original values that were previously reported, the revised values, and an explanation of the reason for the change. This explanation is critical and you should be as clear and detailed as possible.
4. Attach Supporting Documents: Depending on the nature of the change, you might need to attach additional supporting schedules, forms, or statements. The IRS wants to see proof for each correction, so don’t skip this important step.
5. File the Amended Return: Form 1120-X must be filed by mail to the specific IRS address listed for amended returns (address may vary based on where the business is located), not electronically. Ensure the address on the form is current. You must also file each 1120X for the corresponding tax year.
6. Track the Status: Once submitted, it’s a good idea to keep track of the status of your amended return, so you know it was received. You should expect it will take the IRS a few months to process the amended return, which is usually much longer than the original submission.

Important Parts of Form 1120-X

Let’s take a look at some key parts of Form 1120-X:

• Identifying Information: You’ll need to include basic information about the corporation, such as its name, address, employer identification number (EIN), and the tax year you’re amending. Make sure this is exactly as it appears on the original return.
• Part I: Tax Liability: This part of the form requires you to enter the original tax liability, as well as the change to that tax liability.
• Part II: Explanation of Changes: This is a crucial section. Here, you’ll explain why you’re amending the return. Be thorough and specific. Don’t just say “deduction error” – specify which deduction and why it was wrong.
• Tax Payments: There is a section that looks at your payments. If, due to corrections, the business owes additional taxes, you must submit that payment with the form. If the corrections resulted in a refund, the IRS will process the difference for payment.

Who Needs to File Form 1120-X?

Any corporation that has filed Form 1120 (U.S. Corporation Income Tax Return) and needs to correct it can file Form 1120-X. This includes:

• Regular C Corporations
• S Corporations (though S-Corps may need to adjust their Form 1120-S using Form 1120X, as well.)
• Certain other entities that file a corporate tax return

It’s essential for any business entity filing an 1120 to understand when Form 1120-X is necessary.

How Does Form 1120-X Relate to Other Tax Forms?

Form 1120-X is directly related to Form 1120, since it’s used to amend it. Form 1120X is also used to amend a variety of related corporation tax forms, such as 1120-F (U.S. Income Tax Return of a Foreign Corporation), 1120-L (U.S. Life Insurance Company Income Tax Return), 1120-PC (U.S. Property and Casualty Insurance Company Income Tax Return).

Here are a few other related concepts to be aware of:

• Form 1040-X (Amended U.S. Individual Income Tax Return): This is the individual equivalent of Form 1120-X. Individuals use this to amend their personal tax returns.
• Form 843 (Claim for Refund and Request for Abatement): While Form 1120-X is typically the primary form to amend corporate taxes, Form 843 may be used to seek a refund or reduce a penalty assessed outside the original return or when a correction requires a different method than amending the return itself.
• Statute of Limitations: There’s a time limit for filing amended returns (typically three years from when you filed the original return or two years from when you paid the tax, whichever is later). Be aware of these deadlines when you decide to amend a past return.

Tips for Using Form 1120-X Effectively

Here are a few tips to help corporations when filing Form 1120-X:

• Act Promptly: Don’t delay in filing an amended return once you discover an error. The sooner you address it, the better.
• Keep Detailed Records: Ensure you keep very detailed records of every change that is made, along with the documentation to support these revisions. Having complete and accurate records will not only help in preparing the amendment, but will ensure that if the IRS has any questions, you will be prepared.
• Consult a Professional: If you’re unsure about how to complete Form 1120-X, seek guidance from a tax professional. They can help you understand your obligations and ensure everything is filed correctly.
• Be Honest and Transparent: Always be transparent with the IRS. Don’t try to hide mistakes. Instead, accurately report the changes that need to be made to ensure the business is compliant.
• Review Thoroughly: Before submitting Form 1120-X, carefully review it. Confirm that you’ve included all the necessary information and explanations. Errors in the amended return may cause additional problems with the IRS.

Common Mistakes to Avoid

Here are some common mistakes corporations make when filing Form 1120-X:

• Missing Deadlines: As mentioned, there is a statute of limitations for amending returns, so don’t wait too long.
• Incomplete Explanations: Don’t simply write “error.” Provide a full and detailed explanation of the issue, using real numbers and supporting documentation.
• Failing to Attach Supporting Documents: The IRS requires documentation that backs up the corrections, so be sure that you attach every needed form, schedule, and statement.
• Not Updating Contact Information: When moving locations, or even changing a business manager, it is critical to make sure that the IRS knows how to reach you if they need more clarification or have questions.
• Not Seeking Professional Help: While not required, you should seriously consider consulting with a tax professional to ensure you are submitting the amended return correctly.

Final Thoughts

Form 1120-X is an important tool for corporations to maintain compliance with tax laws and ensure that tax returns are accurate. While it may seem intimidating at first glance, understanding the purpose, process, and requirements will help ensure corporations are doing everything they can to submit an accurate amendment. Just as with all tax requirements, it is important to stay current with all tax laws to avoid future problems.