Whether you forget to include revenue, miss a deductible business expense or make some other mistake on your Schedule C, you usually can refile your taxes to correct it. In order to refile a corrected Schedule C, the Internal Revenue Service requires the filing of an amended tax return on Form 1040X.
Prepare a New Schedule C & Form 1040X
When filing Form 1040X, the IRS wants you to attach a new and corrected Schedule C. Once revised, Schedule C may report a different net profit or loss than the the original return included. In this case, you'll have to recalculate your federal taxes since you'll need to report the precise impact the new Schedule C has on your deductions, credits, taxable income and ultimately the amount of tax you may owe on Form 1040X. It isn't necessary, however, to submit a new 1040 form with the Schedule C – Form 1040X becomes your new tax return.
If refiling Schedule C reduces the tax bill reported on the original return, you generally have three years from the time that return was filed, or within two years of paying that year's taxes, -- whichever is later -- to claim a refund. When the amendment increases your tax, no time limit exists for filing a new Schedule C and Form 1040X.