Why You May Need to File an Amended Return
Few people look forward to tax filing season. Unless you are an accountant who loves tax season, you probably dread that time of year, and you are thrilled when your return is in and your refund is on the way or your tax debt is all paid off.
When you sign your tax return and send it in, you may think that your tax filing is finally over and that the IRS will not be bugging you for another year. That’s unfortunately not always the case. Millions of Americans get letters from the IRS stating they owe more money or asking for more information. So there are times when you may need to revisit your old return and file an amended one.
NOTE: If you have back tax debt, are under audit, or have multiple years of unfiled tax returns, we highly recommend you reach out to our firm first. Our clients never have to talk to the IRS, and tax resolution through our firm can save you money and time in the long run. You might also be eligible for other IRS relief programs or get your penalties reduced or removed. Reach out to our firm today for a consultation.
So when should you file an amended return, and how do you go about it? Here are some key things you need to know.
You Forgot to Report All Your Income
If you neglected to report all of your income, it is only a matter of time until the IRS finds out, and when they do you could be on the wrong side of a big bill. So instead of waiting for the IRS to catch up, fess up by filing an amended return. If you wait for the IRS to notify you – and they definitely will – they will tack on an additional 20% or 75% penalty depending on the severity of the omission. There is no accuracy penalty if you fix it yourself first.
Be sure to gather up all of your documents and compare the income you reported to the new total you have now calculated. If you owe any additional tax, you will want to pay it right away to avoid interest and penalties.
Brokerage Forms are Sometimes Late
If you have stock market holdings and own mutual funds, you will be receiving forms from the brokerage firms that hold those accounts. Those forms will provide details of the dividend income and capital gains you received, so you can provide accurate filings to the IRS.
What you may not know is that those brokerage and mutual fund statements are sometimes sent out late. Worse yet, the numbers are often updated after the fact, meaning the information you filed on your original return may no longer be accurate.
If you receive an updated 1099 from your investment company, you may need to file an amended return to account for the discrepancy. If you fail to update your own numbers, the IRS could come after you for additional taxes and penalties.
You Got a Tax Bill But You Know You Don’t Owe
This can be tricky and it’s best to have representation from a firm that specializes in tax resolution like Bailey Tax & Accounting. If the IRS is sending you letters claiming you owe money, but you’re certain you don’t owe, then filing an amended return can sometimes do the trick, but there is often more to it.
Another thing to note is that the IRS makes mistakes – and they make a LOT of them – so having a firm with a specialty in taking on the IRS, like Bailey Tax & Accounting, on your side can help clear these mistakes and settle your tax debt.
You Forgot to Claim a Legitimate Credit or Deduction
Sometimes an amended return can reduce the amount you owe if you forgot to claim a legitimate tax credit or deduction. Even if you have already filed your return, you can still go back and claim any credits or deductions you may have missed.
File Your Amended Return Within Three Years
You only have a limited amount of time to file an amended return, so you need to act quickly. In most cases you will need to file your amended return within three years of the due date, and if you miss the deadline you could be out of luck.
If you think you need to file an amended return, check out your tax records for the last three years. If you identify any potential issues, or overlooked credits and deductions, it is time to file your amended return.
Tax filing season may be over, but you can always file an amended return. As long as you are within the allowable time period, you can adjust your already filed returns to reflect previous omissions, or take advantage of overlooked deductions.
OWE BACK TAXES?
Our firm specializes in tax problem resolution. We serve clients all over the United States so don’t hesitate to reach out. If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.