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While collecting data to file a return for someone who is deceased, I discovered a significant deduction that was repeatedly not claimed in previous years. Specifically, health insurance on Schedule C.

Claiming the deduction would have decreased the tax obligation.

Is it possible to file an amended return so that the refund can be added to the estate's assets?

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Absolutely, and that's exactly what will happen.

You may use Form 1040X to amend a 1040 tax return for up to three years after the due date of the initial filing. For instance you may amend your 2017 taxes as late as April 17, 2021. You are at?missed? the time limit to amend 2014 taxes (April 15 2015 + 3 years, but April 15 2018 is a Sunday, so maybe tomorrow will suffice.) If you are tardy, you can try writing an excuse, but don't get your hopes up. A procedural excuse like "I was recently assigned as executor" might work.

Don't forget to amend the state tax returns as well. They sometimes have a longer "statute of limitations" than the Federal, so you might still have a swing at 2014.

It's easiest to create two "scratchpad" versions of that year's (not this year's!) 1040 form:

  • that captures the numbers as actually filed (even if those were on a Form 1040EZ, 1040A, or some sort of e-"file" thingie.
  • That has the numbers as you want them -- you can just use the first 1040 and colored pencil if you want.

The 1040X will ask you a lot of questions about the differences between the two forms. This is easy-peasy if you do those scratchpads. Otherwise it can be hard to understand what they're asking and source the correct numbers.

  • The deadlines seem to be in line with current year deadlines rather than exactly 3-years from original due date, IRS says last chance for 2014 is 4/17/2018. Also, if extensions are granted on original filing then they have 3-years from the extension deadline to amend for refund. – Hart CO Apr 16 '18 at 0:27
  • irs.gov/newsroom/… – Hart CO Apr 16 '18 at 0:31
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    @HartCO: not quite. If the original return was filed after the normal due date -- with extension or without -- you get 3 years from filing. Or 2 years from payment, but that becomes a factor only if you paid seriously late, which incurs penalties and interest, so you don't usually want to do that. See page 3 in 1040X instructions. – dave_thompson_085 Apr 16 '18 at 1:01
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    All the efile programs I have used allow, and strongly encourage, the user to print out paper forms to keep for their records, which are in the standard format even if the electronic filing isn't. – dave_thompson_085 Apr 16 '18 at 1:06
  • @dave_thompson_085 I really, really hope it's were true that filing late tolls the statute of limitations on amendments! – Harper - Reinstate Monica Apr 16 '18 at 15:55

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