Posted by Wally Ross on Tue, Aug 03, 2010
What should you do if you find that you made a mistake on your tax return after it's filed? Did you miss a big deduction? Perhaps you received a notice of income you earned after you filed your taxes. Or perhaps you should have itemized instead of taking the standard deduction.
No matter the mistake, there is no need to panic. Chances are that you still have plenty of time to amend your return. And don't think that you are the only one - the IRS receives thousands of amended returns each year.
The general rule is that you have three years to amend a personal or business tax return. There are certain exemptions if you paid your taxes late or if you are claiming certain business losses or carrybacks. You may have as long as seven years if you are filing to claim a loss on a worthless security.
With the current state of the economy, now is the perfect time to examine losses. If your business has underperformed, or if you have had a year where investments or property lost in significant value, we can amended your previous tax returns to reduce your tax liability and, accordingly, request a refund.
You can tell if a tax return is an amendment by the letter "X" following the form name. For example, individual amended returns are Form 1040X and corporate amended returns are Form 1120X. A separate form must be filed for each previous year you want to change. You are required to file a paper copy to amend your return, even if you originally filed electronically or by telephone.
If you owe additional tax because of the change, you should send a check at the time you file your amended return. The IRS will let you know if additional interest or penalites are owed.
Please contact our office if you have any questions about an earlier return. We can let you know whether you need to file an amendment and help you with any of the necessary paperwork.
Posted by Wally Ross on Tue, Jul 13, 2010
Written by: Jordan Baigas, Office Manager
When a client has a tax liability our accountants will often help them set-up a payment plan with the IRS. In this regard, last month a client of ours received the following notice:
In the past, even if only one payment was missed the entire installment agreement was terminated and all outstanding tax liability was due immediately. Now, as it appears from this notice, not only does the Fed "understand" the hardships of current economic conditions, but they even "might be able to reduce monthly payment."
Shocked? Definitely. Humored? A bit. But, hey, we aren't complaining. If the IRS has taken a friendly-turn it is welcomed whole-heartedly. However, once Uncle Sam starts negotiating your tax payments, doesn't it make you wonder? Why is the IRS so desperate for money? Shouldn't the administration be cutting taxes for everyone? Should I adjust my W-4 so that less is withheld from each paycheck in case there's no money for a refund in the future?
Honestly, only time will tell. We suggest that you have discipline in your savings and always use your money wisely. And, who knows, maybe the IRS will continue to be as understanding when you get in a sticky situation.