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CPA discusses Amended Business Tax Returns | 1120-X, 1120-S, 1065 and 1040-X

Amended business tax returns are a fact of life; required information arrives late, errors occur. Amending a return probably doesn’t raise IRS or State suspicion per se. Still, accuracy is prudent. While most web chatter focuses on the IRS, most CPAs would say the State return is usually more complex. General rules include preparing and filing a separate return for each tax year amended. If you didn’t understand the tax issues involved on the original return, it’s wise to understand them before preparing the amended return.

The Explanation of Changes is the most delicate part of an amended business tax return. I try to anticipate anything a skeptical IRS agent might suspect and then give a well crafted explanation for it, backed by proper documentation. Conversely, I try not to open any other areas of the return to scrutiny. The most common mistake I see on amended business tax returns? The preparer didn’t really understand the underlying changes and therefore muddled the explanation.

Partnerships and S Corporations

No special Form is required. Prepare a new, and now correct, Form 1065 or 1120-S. Mark it as amended. Easy enough. Attach an Explanation of Changes and documentation.

Single Member LLCs and Sole Proprietors

File Form 1040-X. Each software has specific procedure(s) to produce the 1040-X.

C Corporations

Use From 1120-X.

If you don’t have a local CPA skilled in amending business tax returns, consider calling us for a free consult at (910) 399-2705. Our virtual office makes dealing with us easy, even if you’re across the country from Wilmington, NC.


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