There may be times when you have overlooked something on your tax return that actually goes against you and was in favor of the IRS. Alternatively, you may realize that you have not reported all of your income and could owe more in taxes to the IRS. Whether you owe money to the IRS, or you are due money back from the agency, it may be in your interest to file an amended return. There are other times when it may be best to leave your initial tax return filing as is. An experienced tax attorney from Thorgood Law Firm can advise you about what to do in your own individual situation.
How to Amend Your Tax Return with the IRS
The IRS allows you to file an amended tax return, so long as you are within the statute of limitations. You have three years from the date of initially filing your taxes to file an amended return. The date on which you filed your taxes is considered to be April of the following tax year, even if you actually filed your return beforehand. You must file your amended return on IRS Form 1040-X. This form does not make you file your taxes from scratch. Instead, you call the IRS’s attention to information that has been changed on your return. Presumably, after the agency has had a chance to review your amended tax return, you are due money back if they have accepted your changes.
When Should You Consider Filing an Amended Tax Return?
There are things that could come to your attention after you have initially filed your return that could lead to you getting either a larger refund or money back that you have already paid to the IRS. If you may be owed a substantial amount of money, and you know that you are on sound legal footing concerning the reasons why, you can and should file an amended tax return. Remember that this is your money, and the IRS must give it back to you if you never owed the taxes in the first place.
Common reasons why you may consider filing a Form 1040-X include:
- Overlooked deductions: You did not take advantage of all of the deductions that may have been available to you when you filed your previous return. These deductions are still available, and you can go back and claim them, so long as the three years have not passed.
- New advice from a tax professional: You may have spoken to a tax lawyer or professional who has reviewed your situation and your prior returns, and they have advised you that it is still possible to make a change.
- Adding or reducing dependents: You may not have known that you could claim someone as a dependent, or you may have wrongfully declared that someone was your dependent
- Missing or incorrect income information: You may not have declared all of your income because you did not receive accurate or correct W-2’s or 1099 information at the time that you filed your return. The IRS may catch this information on their own because they receive information about your income too, but you may not want to wait for this to happen. You never know when the IRS will spot a discrepancy and send you a notice for taxes owed. By that point, the IRS may have added a significant amount of interests and penalties to your tax bill.
You may want to be proactive about amending your return, even if it means that you will owe the IRS money. If the agency spots an error at any time during the statute of limitations, whether it is due to an audit or other scrutiny, it could be far worse for you. A tax lawyer can let you know if it makes sense to file an amended return.
When You May Not Want to File an Amended Tax Return
There are times when it may not be worth it, or in your best interest, to file an amended return. First, it may not merit the time and potential risk if you are only due a small amount of money because of the correction. Second, if you are seeking to amend your return because of a mathematical mistake, know that the IRS catches errors on their own, and the computers will automatically correct them.
You will also not want to file an amended return if you are making a potentially risky change without the advice of a tax lawyer. If you do not have legal help, and you are making a change that may not be supported by tax laws and IRS interpretations, you could be putting yourself in a worse legal position than if you did nothing.
Filing an amended tax return does not come without its own risks. Any time that the IRS reviews your return, there is the potential for an increased amount of scrutiny. Seeing an amended return may cause the IRS to question the information that you have presented, and it could raise the risk that you are subjected to an audit. The result of the audit could mean that you end up having to pay money to the IRS at the end of the day, instead of receiving something back from the agency. Accordingly, filing an amended tax return may not be in your best interest, since it could not be worth the risk.
In almost all cases of Form 1040-X filing, an IRS employee has to separately process the filing – it is almost never processed as a batch. The inevitable consequence of this is that the return may get more scrutiny and subject to enhanced review and perhaps lead to an audit.
Contact a New York Tax Lawyer Right Away
To learn more about whether you should amend your tax return, and for help in completing the paperwork, speak to a New York tax attorney at Thorgood Law Firm. We have deep familiarity with tax laws and how they apply to both individuals and businesses. You can schedule a free initial consultation with a tax lawyer by messaging us online or by calling us today at (212) 490-0704. We work with clients nationally on pressing tax issues, providing you with knowledgeable counsel and advocacy.
