Made a Mistake On Your Tax Return? Here’s What To Do.
Tax returns can
be complicated and tricky to understand. Even for a professional, it can be surprisingly difficult to get every number and
detail right.
Often,
you only notice the mistakes when you take a casual look at your return days
after you submit it online or drop it in the mailbox. Or worse, the IRS sends
you a letter telling you something is off.
So is there anything that you can do after your return is in?
Actually,
there's a lot that you can do. But if you don’t know where to start, it’s best to
leave it to a professional. Our tax resolution specialists can navigate the IRS
maze so that you have nothing to worry about. We help people who owe back taxes or have back tax debt.
Call us today for a free consultation at (470) 305-1233, or visit us online at www.fairtaxsolutions.com!
3 Major Types Of Mistakes
There are many
red flags the IRS looks for on each tax return, but here are 3 common ones
taxpayers make.
1: Not reporting
all your income. No matter how much or little you make, report everything. In
some way or another, unless you run a strictly cash business (another red
flag), all of your income is reported to the IRS. W2, 1099 and other forms you
receive are duplicated and sent in to the IRS. If your reported income doesn't
match theirs, that's a red flag.
2: Overstating business expenses. Depending on
the type of job you have, there can be many legitimate expenses that your
employer doesn't reimburse you for. If you’re a business, you might be tempted
to write off just a little extra. These might be genuine deductions. But don't
try to deduct something that's not on the approved list and don't claim
deductions way outside the norm. Check with your tax professional and stay up
to date with tax laws so you’re not padding your tax return with write offs.
3. Math errors. Whether you file electronically
or still file paper forms, your information gets entered into a computer. And
one thing computers are very good at is doing math. If things don’t add up, or
there was an honest mistake in inputting the information, it can raise a red
flag. A math error won't necessarily get you an audit, but it will get
attention you may not want. Make sure to double check your returns and have a
qualified tax professional assist you and keep you out of tax trouble.
Filing an Amended Return - The 1040X
Individual income
tax returns filed with the IRS can be amended up to three years after the due
date of the original return by filing IRS Form 1040X.
On a
1040X form, the IRS only asks to be shown what was originally filed, what the
corrected details are and the reason why you need to make changes. The form
also includes a section where you get to change the personal exemptions that
you've claimed on your tax return -- just in case you make a mistake listing
your dependents.
A few tips on filing your 1040X form
●
For each year that you need to make corrections for, you
need to use a separate 1040X form and mail it in, in its own envelope.
●
Each form should have the return year mentioned at the
top.
●
On the back of the form, you need to explain the changes
you've made and your reasons for them.
●
Any schedules, forms or anything else that are affected by
your change need to be sent in with the form.
●
If the corrections made to your federal form affect your
state taxes, you need to send in a corrected return for that as well.
However, we
strongly suggest consulting a tax resolution professional to help with your
amended return. They can often file multiple years of unfiled tax returns, help
you settle for a fraction of what you owe, and at the very least save you a
headache.
You Have 3 Years
Many tax filers
only notice a mistake on a tax return only when they look at it preparing their
taxes the following year. Mistakes may come to their attention in one of
several ways. They may share something with their tax preparer that they may
have neglected to mention in a previous year. The tax preparer, then, may
notice the need for amendments to a previous year's return, as well.
There is no set
time period within which you must correct your return. You can do it any time
you notice it. A general rule that the IRS follows, though, is to entertain
corrections for 3 years after an original return is filed.
The 1040X is a paper-only form
Even if you
always e-file your tax returns, you'll need to file the 1040X form as a
physical, paper form. The IRS still isn't equipped to handle the 1040X form
electronically. You also need to pay attention to where you mail it in - 1040X
forms do not go to the same IRS service center address as regular returns.
If Correcting Your Mistake Results In More Taxes Owed, You Should
Still Amend Your Return
If
your tax return contains a mistake that shortchanges the IRS in a more serious
way, chances are good that the IRS will discover it. For
instance, if you made money off a freelancing job that you didn't file a 1099
form for, the IRS could find out and you could end up paying interest for a few
years for the tax owed. If you catch it yourself, you'll save on interest, at
least.
If you know
you’ll have outstanding tax debt and owe more than $10k to the IRS or state but
can’t pay in full, contact our firm today. We help people find tax relief and
sometimes settle their tax debt for a fraction of what’s owed; contact us at (470) 305-1233 or visit us online at www.fairtaxsolutions.com!
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