Should I file for an amended tax return?
If you filed your tax return for this year, you might find out that you made a silly mistake or made a false statement that could result in you receiving money back from the IRS. When filing for an amended tax return, there are particular forms, rules, and regulations that you should be aware of when trying to get your money back.
Pay Any Tax Owed Right Away
Important to realize is that the IRS is rather unforgiving when it comes to paying back your tax debt on time. Concretely, you should make sure you pay the obligated tax payment in time to ensure you won’t receive a penalty or any additional interest charges. To elaborate, you might be entitled to a refund when you made a mistake on your tax return. However, before the IRS makes a deliberate conclusion, you are still expected to make payments, regardless of what you believe to be true regarding your tax return.
If you do pay your bill late, you can generally count on paying interest since the IRS will charge you interest on any taxes not paid by the due date. You can minimize the amount of interest based on how quickly you pay down the debt. The IRS’ interest rates change quarterly, based on different factors, like the interest rates of the Federal Reserve. In addition, you can receive a penalty if you fail to pay the tax due within 21 calendar days of the IRS’ request. The consequences of this are dire and should be avoided at all costs.
Use Form 1040X
If you need to file an amended personal income tax return, you’ll likely need to use IRS Form 1040X. However, in certain circumstances, Form 1045 may be used instead of Form 1040X. For example, if you had to return previously taxed income or carry back certain losses or tax credits, Form 1045 may be possible. You should also utilize Form 843 if you need a refund of fines and interest or an increase in the amount of tax you currently owe. Otherwise, you should use Form 1040X.
Don’t forget to sign the corrected return and provide any necessary documents or schedules. In addition, you must attach any schedule or form related to your modifications.
File Your Amended Return Before It’s Too Late
In general, you must file an updated return within three years of the date you filed your initial recovery, or within two years of the date, you paid any tax owed, whichever is later. If you file your initial return before the due date (typically April 15), it is deemed filed on the due date. There are various specific due-date regulations for modified reports based on changes relating to bad debts, foreign tax credits, net operating losses, natural catastrophes, service or injury in a conflict zone, and other instances. We strongly advise you to consult one of our certified tax professionals to determine whether the rules apply to your situation. In most circumstances, calculating updated tax returns on your own will cost you a large amount of money and time. A professional can relieve you from in-depth research and complicated forms.
What if I Miscalculated my tax liability
Individual taxpayers occasionally misread the costs of their investments as reported on their tax returns. Misreading the costs are familiar with mutual funds or equities that reinvest their dividends. Taxpayers only consider the original purchase price and fail to account for reinvested earnings. They only realize afterward that the actual gain is substantially lower than the amount reported to the IRS, resulting in a greater tax liability.
What if I make a terrible mistake in my tax return?
If you’ve made a significant error in your tax return, it might be possible you owe a lot of money to the IRS. In case this happens, you should ensure to pay your obligations according to the letters received by the IRS. If you cannot fulfill the tax obligations while waiting for your tax amendment results, you might suffer from interest charges, additional fees, and severe penalties due to default.
Let’s say you’re already in debt; the IRS can be pretty forgiving, as it’s in their interest for you to repay your debt. The IRS has a ‘fresh start program’ that helps individuals arrange payment plans for their debt repayment. In extraordinary cases, the IRS might even lift some of the tax debt owed, also known as an offer in compromise (OIC). An offer in compromise, however, is a rare occurrence. In most cases, the IRS will arrange a payment plan, helping you to pay a reasonable monthly amount based on your income, expenses, assets, and liabilities.
