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Last Updated: 12/10/2018

Amending a Return in Special Circumstances

You may want to consult a tax professional when amending your tax return in the following situations:

  • Divorce: You are amending a joint tax return when you and your spouse are now divorced.
  • Ponzi scheme: You were a victim of a Ponzi scheme. A Ponzi scheme is an illegal investment arrangement that pays fraudulent returns to investors from their own money or that paid by other investors (as opposed to actual profits).
  • Protective claims: You are protecting your right to a potential refund in the future (filing a protective claim).

What if my spouse and I divorce after filing a joint tax return?

You may file an amended return or refund claim if the change is attributed to you and affects your tax due. If you are claiming a refund, calculate the refund amount as follows:

1) Recompute the joint tax due for your original return.

2) Recompute you and your ex-spouse’s separate tax due by completing “Married Filing Separate” returns for each of you. (You will not file these returns.)

3) Determine you and your ex-spouse’s share of the joint tax due (because neither spouse can receive a refund exceeding their share). Based on the results from steps 1 and 2, calculate your share using the formula below:

Your separate tax due​
______________________________________​_____ X​ Joint tax due   =   Your share​
Total of you and your ex-spouse’s separate taxes due​

4) Subtract your share of the joint tax due from your own withholding or estimated tax payments to determine your refund amount. File the amended return as “married filing joint” (because the filing status must match your original return). 

Example

Mary and Bill filed a joint return with a Minnesota taxable income amount of $110,000. Of that amount, $75,000 belongs to Bill and $35,000 belongs to Mary. Their tax due was $11,000. The next year, they get a divorce.

Mary later realizes she failed to claim a $10,000 deduction on their joint return. She files a refund claim showing her taxable income for that year is now only $25,000 ($35,000 - $10,000). To calculate Mary’s refund, we follow the steps outlined above:

1) Recompute their joint tax due based on $100,000 in taxable income (after taking Mary’s deduction). For this example, the recomputed tax due is $10,000.

2) Recompute the separate tax due by completing “married filing separate” returns for both Mary and Bill. For this example, Mary’s recomputed tax due is $2,250 and Bill’s is $8,250.

3) Determine Mary’s share of the recomputed joint tax due:

$2,250 (Mary’s separate tax due)
_________________________________​ X​ $10,000 (recomputed ​ =​ $2,100 (Mary’s share, ​
$10,500 (total of Mary’s and Bill’s separate ​ joint tax due)​ that is 21% X $10,000) ​
taxes due, that is $2,250 + $8,250)​

4) Determine Mary’s refund amount. The $1,000 change in tax due was because of Mary’s deduction, and the amount does not exceed her share of the joint tax due ($2,100). Mary can claim the entire $1,000 as a refund when she files an amended return, if she had at least that much in withholding and estimated tax. (She must file as “married filing joint.”)

What if I was a victim of a Ponzi Scheme?

You are allowed to deduct your investment losses from a Ponzi scheme on your tax returns. The Minnesota Department of Revenue follows the same rules as the Internal Revenue Service (IRS), as outlined below.

Federal Procedure

Federal Revenue Procedure 2009-20 provides an optional “safe harbor” treatment if you were affected by a Ponzi scheme. This procedure allows the loss as a “theft loss” deduction, and you may file amended returns for the years affected.

Minnesota Procedure

To amend your Minnesota return, file Form M1X, Amended Income Tax Return, based on the federal procedure. Follow the federal procedure to avoid delays in processing your return.

You should also send us copies of any action taken by the IRS once they process your amended federal return. Mail to:

Minnesota Revenue
Attn: Ponzi Scheme Amends
Mail Station 4122
St. Paul, MN 55146-4122

What if I’m protecting my right to a potential refund in the future (filing a protective claim)?

You may file a protective claim by amending your tax return if you anticipate a refund in the future. This situation applies if your refund depends on something that will not be resolved until the deadline for claiming a refund has passed. Examples include a pending lawsuit or an expected law change. A protective claim preserves your right to claim a refund once the situation is resolved.

To file a protective claim in Minnesota, you must first amend your federal tax return. Then, complete and file Form M1X. When selecting your reason for amending, check the box titled “Claim due to a pending court case.” Include a copy of your amended federal return. We keep these amended returns until the court case or other matter is resolved.

After the situation is resolved, review the amended return you submitted to us for your protective claim.

  • If your amended return showed the correct changes, send us a copy of the IRS audit report, notice of adjustment, or refund check showing your federal claim has been accepted. Mail to:

Minnesota Revenue
Mail Station 4122
St. Paul, MN 55146-4122

  • If your amended return did not show the correct changes, file a new Form M1X showing all changes relating to the claim.