| A double edged weapon | | | | This gives IRS an opportunity to double check your |
| In fact it’s a double edged weapon. If you file an | | | | return. So its important to ‘prove’ your intentions. |
| amended return, it will raise eyebrows and IRS may | | | | For example, if you have missed out a charitable |
| take your return for audit. But at the same time, if you | | | | contribution, then its better to attach a receipt with the |
| do it correctly, your chances of getting audited are | | | | amended return, which will automatically resolve the |
| reduced considerably! | | | | issue. This will convince the reviewing person that you |
| Sometimes you make mistakes inadvertently. Your | | | | are sincere in your approach and you know the rules. |
| math is fine, your supporting papers are appropriately | | | | Within how much time you can amend your return? |
| inserted, your tax strategies are correct, but then | | | | The legal limitation is three years. So you get three |
| some things slip off your mind. | | | | years from the date your original return was due. For |
| Don’t worry. This is not something incurable. If you | | | | example, amendment to your return filed on April 15, |
| find a mistake in your tax return, the best way is to | | | | 2005 should have been made before April 15, 2008. |
| correct it quickly. It may be a modified W-2 in favour | | | | So if you have filed a return by April 15, 2006, then you |
| of IRS or an unclaimed deduction in your favor, just | | | | can still amend it before April 15, 2009. But take my |
| proceed to correct it. | | | | advice, don’t prolong too much! |
| There is a specific form for such corrections – | | | | This provision of limitation is very important if you are |
| Form 1040X | | | | due for a refund and still not filed your return for the |
| This form is very easy to fill in. It has three parts – | | | | current year. Some people just delay it, thinking that |
| one for what you filled in originally, then one for what | | | | they don’t owe anything to IRS so delay is fine. But |
| changes you wish to make and the last one for final | | | | they are wrong in that assumption, because if the |
| numbers. You can explain the changes at the back of | | | | period of three years expires, they lose their tax |
| the form. | | | | refunds. |
| Take this opportunity to show your sincerity to IRS. If | | | | In fact that refund of overpaid money could have been |
| you are claiming a deduction which was originally | | | | used for paying your subsequent taxes. But due to the |
| missed, then attach relevant receipt. If you want to | | | | delay, the money is lost. IRS admits from time to time |
| correct any third party document, attach a copy. This | | | | that it is holding billions of dollars in unclaimed refunds. |
| will support your changes. | | | | Remember, there are penalties for non-filing – even |
| This will minimize your chances of making it in the audit | | | | if you don’t owe any tax. So just go ahead and file. |
| list. Just because you have filed an amended return, it | | | | IRS computers may be looking for the corrections! |
| will NOT initiate the audit process. There are some | | | | If you file an amended return claiming a deduction, |
| extra checks which IRS will perform on amended | | | | which was legitimate and unclaimed, say before two |
| returns. The concerned officer will call up the original | | | | years, IRS will give you interest on holding your money. |
| return and compare it with changes you have made in | | | | (That interest is taxable, of course! |
| the amended return. | | | | |