How to Fix Tax Return Errors
Suppose you discover a mistake or omission of an item on the 2011 federal tax return you recently filed. Should you ignore the error? Although it can depend on the nature and significance of the item, the answer is generally "no." But the matter may be resolved by filing an amended 2011 return.
Clearly, you should file an amended return right away if you've paid less tax than the amount you actually owe for 2011. If the IRS eventually detects the mistake, it can require you to pay the difference in tax liability plus substantial interest and penalties. As a general rule, the IRS has three years in which to audit a return, but the statute of limitations is extended to six years if you underreport income by more than 25%. And there's no time limit if fraud is involved.
When a change works in your favor, consider all the ramifications. If you stand to receive only a few extra dollars back, it's probably not worth the effort. This also gives the IRS another chance to scrutinize your return. On the other hand, if you expect a sizable refund in return, it usually makes sense to pursue this action.
One of the common reasons for amending a return is to
change your tax filing status or dependency exemptions. For instance, there could be some confusion over claiming exemptions for children following a divorce. Similarly, you may have overlooked special deductions or credits available on 2011 returns.
If you discover an error or missing information on a return you already filed, give us a call. We can review the situation with you and help you file an amended return if necessary.
Please be advised that, based upon current Internal Revenue Service (IRS) rules and standards, the advice herein is not intended to be used, nor can it be used, as the sole basis for decisions. Additional issues may exist that could affect the treatment of the individual transactions, and this narrative does not provide a conclusion with respect to all such issues.
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