Today I was reviewing a tax return. The taxpayer told me that she and her husband supported their three children, and also both of their mothers. As I looked at their return, however, I saw they had only claimed their children as dependents. The taxpayer told me she thought you could only claim children, not adults. She has made the same mistake for the last five years.

I explained to her the process for amending a tax return. Generally you can amend a return up to three years from the date it was due, or two years from the date you paid the tax, whichever is later. That means it is too late for her to get any extra money from her 2008 and 2009 returns. We can still make changes to 2010, 2011 and 2012.

The form we use to amend the return is called 1040X. First we list all the numbers that were on the originally filed tax return. Then we list the numbers as they should have appeared, and write an explanation to tell the IRS what we have changed. The 1040X cannot be filed electronically at this time, it must be mailed to IRS, and if you have money coming back to you, it will generally take about 12 weeks. As an added bonus, the IRS will pay you interest too, since they kept your money longer than they should have!

My client has gone home to check and make sure that her mother and mother-in-law qualified as her dependents in each year. If they meet the test, we will prepare three separate amendments, and mail them to the IRS in three separate envelopes. Last thing to remember, if IRS pays her interest, she must report that interest as income on next year’s tax return, just like she would any other interest received.