Small Business Accountants 5 Simple Rules to Follow When Amending Your Tax Return
Small Business Accountants Miami
Your Small Business Accountants advices you that you forgot to report some income on your 1040 or just got a corrected Form 1099 or K-1 in the mail. What should you do? Small Business Accountants provide 5 tips for amending your tax returns.
1. Amended returns aren’t mandatory, according to Small Business Accountants VieraCPA. You might be surprised to find you are not obligated to file an amended return, even though Small Business Accountants tax advisers may tell you it’s a good idea—that’s because the IRS will probably send you a bill based on the revised Form 1099 or K-1 once IRS computers match that form against your Form 1040 according to Small Business Accountants VieraCPA.
Small Business Accountants VieraCPA note amended returns are not mandatory even if something happens after you file that makes it clear your original return contains mistakes. Ask if the return you filed was accurate to your best knowledge when you filed it. If it was, you are probably safe in not filing an amendment.
Conversely, if you knew your return was inaccurate when you filed it, Small Business Accountants VieraCPA warns you should amend it to make it accurate without delay. The IRS rarely brings up an originally filed return in civil audits or criminal prosecutions once the taxpayer attempts to correct it by filing an amended return. But to take advantage of this rule, you need to be proactive, and you need to make the correction before the IRS finds your error according to Small Business Accountants VieraCPA.
2. You can’t cherry-pick what you correct states Small Business Accountants VieraCPA. You don’t have to file an amended return, but if you do, you must correct everything. You can’t cherry-pick and only make corrections that get you money back and not those that increase your tax liability. If you amend, you must correct all errors, not just the ones in your favor. See Beware Amending Tax Returns by Small Business Accountants VieraCPA.
3. Some errors don’t merit amending. Math errors are not a reason to amend, since the IRS will correct math errors on your return. Likewise, Small Business Accountants VieraCPA recommend you usually shouldn’t file an amended return if you discover you omitted a Form W-2, forgot to attach schedules, or other glitches of that sort. The IRS can process your return without them or will request them if needed.
Small Business Accountants VieraCPA remind you certain parts of your original return can’t be changed by an amended return. For example, you can change your filing status on an amended return from married filing separate to joint, or from qualifying widow(er) to head of household status. However, you cannot change from married filing joint to married filing separate after the due date for the original return (usually April 15) has passed.
4. Timing counts. You must file a Form 1040X, Amended U.S. Individual Income Tax Return, within three years from the date your Small Business Accountants VieraCPA filed your original return or within two years from the date you paid the tax, whichever is later. This either/or test can give you extra time, but it is safer to amend within three years of your original return so there’s no dispute.
How soon is too soon to amend? You can file an amended tax return right on the heels of your original return if you like. However, Small Business Accountant Firm VieraCPA warns if you are filing to claim an additional refund, you should wait until after you have received your original refund before filing Form 1040X. You may cash the first check while waiting for any additional refund.
5. Only paper will do. Amended returns are only filed on paper, so even if you filed your original return electronically, you’ll have to amend on paper. Amended returns are prepared on Form 1040X. You must use this form whether you previously filed Form 1040, 1040A or 1040EZ. Label the top of the 1040X very clearly with the tax year you are amending. See Small Business Accountants Instruction 1040X.