Filing Form 1120-X: How to Amend a Corporate Tax Return

Form 1120-X, the “Amended U.S. Corporation Income Tax Return,” is a tool for corporations to correct previously submitted income tax filings. This allows a business to formally adjust its reported income, deductions, or tax credits after the initial submission has been processed by the Internal Revenue Service (IRS). The form serves as the official mechanism for ensuring the corporation’s tax liability is accurately stated and paid.

Filing an amended return is not for correcting simple mathematical errors, as the IRS corrects these itself. Instead, it is for substantive changes to the corporation’s tax position. The purpose of the form is to provide a structured way to present these changes, calculate the resulting difference in tax, and explain the reasons for the amendment to the tax authority.

When to File Form 1120-X

A corporation should file Form 1120-X after discovering that a previously filed return contained errors. Common situations include the incorrect reporting of income, the omission of deductions, or the failure to claim available tax credits. For instance, a business might uncover that it misclassified certain expenses, which would require an amendment to claim the proper deduction.

Changes in a corporation’s financial situation can also trigger the need for an amended return. This includes instances where a net operating loss (NOL) or a capital loss from a subsequent year can be carried back to a prior tax year to reduce tax liability and generate a refund. Similarly, a change in accounting method may require an amended return to reflect the financial impact on a prior return.

There are specific time limits for filing Form 1120-X to claim a refund. Generally, the form must be filed within three years from the date the original return was filed or within two years from the date the tax was paid, whichever is later. A return filed before the due date is considered filed on the due date. For claims related to bad debts, the window is extended to seven years from the due date of the return for the year the debt became worthless.

It is important to distinguish the use of Form 1120-X from other correction methods. For example, Form 1139, Corporation Application for Tentative Refund, is used for more straightforward carryback claims of NOLs, capital losses, and certain credits because it can result in a faster refund. Form 1120-X is the appropriate vehicle for a broader range of corrections and changes that are not covered by Form 1139.

Required Information and Documentation

Obtaining a complete copy of the original tax return that is being amended, such as the Form 1120, is a primary step. This document serves as the baseline for all corrections.

Alongside the original return, all documentation that substantiates the changes must be collected. This includes any corrected financial statements, updated receipts, or revised calculations that support the adjustments being made to income, deductions, or credits.

The amendment may also require the completion of new or revised forms and schedules. If a change on Form 1120-X affects other parts of the return, the corresponding forms or schedules must be filled out with the corrected figures and attached to the amended filing. These attached documents should be clearly labeled “As Amended” to distinguish them from the originals. The most current version of Form 1120-X and its instructions should be downloaded directly from the IRS website to ensure compliance with the latest regulations.

How to Complete Form 1120-X

The core of Form 1120-X is divided into two main parts. The first part focuses on the numerical adjustments to the corporation’s tax figures, while the second part requires a detailed narrative explaining the reasons for those adjustments.

Part I: Income, Deductions, and Tax

Part I of the form uses a distinct three-column format to clearly illustrate the changes being made to the tax return. Column A, titled “As originally reported or as previously adjusted,” is where you enter the figures from the original Form 1120. This column establishes the baseline from which all changes will be measured.

Column C, “Correct amount,” reflects the figures as they should have been reported. This column shows the final, accurate numbers after all corrections have been made. The amounts entered here will be supported by the revised schedules and documentation attached to the Form 1120-X.

Column B, “Net change,” captures the mathematical difference between Column A and Column C for each line item. This column isolates the specific adjustments being made. For example, if a corporation discovered an additional $6,000 in deductible independent contractor payments, line 2, “Total deductions,” would show an increase of $6,000 in Column B. This change would then flow through the rest of the form, altering the taxable income and, ultimately, the total tax liability.

Part II: Explanation of Changes

Part II is where the narrative behind the numbers is provided. A clear and detailed explanation for each change reported in Part I must be written in this section. The explanation must be specific, referencing the line numbers on the form that are being changed and citing the supporting documentation that is attached to the return.

For each correction, a separate explanation should be provided. For instance, if amending to correct the classification of payments, the explanation should state which line items are affected, such as the reduction of dividend distributions on Schedule M-2 and the corresponding increase in other deductions on the main form. This detailed narrative provides the necessary context for the IRS reviewer to understand the basis for the amendment.

Submitting Your Amended Return

Corporations can file Form 1120-X electronically or by mail. Many corporations are required to file electronically. For example, if a corporation was required to e-file its original Form 1120, it must also e-file the amended return. Most professional tax software supports the electronic filing of Form 1120-X and will guide the user.

For corporations that are not required to e-file, filing a paper return by mail remains an option. If filing by mail, the signed Form 1120-X should be placed on top, followed by any corrected forms or schedules marked “As Amended,” with supporting documents at the back. Filers must consult the official IRS instructions for Form 1120-X to find the correct mailing address.

After submitting the amended return, corporations should be prepared for a lengthy processing time, which can take six months or longer. The outcome of the review will vary depending on the nature of the amendment. The corporation may receive a refund if the changes resulted in an overpayment, a bill for additional tax due if the changes increased the tax liability, or a letter from the IRS requesting further clarification or documentation.