These words are not uncommon in the tax industry. Believe it or not, it’s quite common for someone to discover that they overlooked an income item, an amended tax document wasn’t received before the taxes were filed, or a deduction was not claimed as it should’ve been. Regardless of how the oversight will affect your taxes, it should not be taken lightly or dismissed.
If you neglect to report an item of income, an IRS inquiry could be on the way whatever interest and fees that have built up close behind. Alternatively, you don’t want any refund you may have had coming to go by the wayside either.
The answer is to file an amended return as quickly as you can once the omission is found. An amended return can also be used in claiming overlooked credit, to correct the number of dependents, overlooked investment transaction, or anything else that should have been reported on the original return.
If the omitted item will result in a tax increase, the penalties and interest can be mitigated by filing an amended return as quickly as possible. Waiting to file the amended return leads to additional issues once the IRS finds something is missing, so it’s best to rectify the issue immediately.
If attempting to claim a refund, an amended return must be filed within three years from the date the original return was filed or within two years from the time the tax was paid, whichever is later.
If you’re worried that the amended return could trigger an audit, remember that the fact that you amend a return does not, in of itself, increase your chances of being selected for an audit. Actually, it could reduce your chances, particularly if you’re fixing an error the IRS would have discovered later anyway.
The fear of many taxpayers when considering an amended return is that an IRS employee has to manually compare the amended return with the original. This is why the amended return needs to include an explanation that clearly justifies the amendment with supporting documentation to defend the changes, even if these were not necessary for the original return. If this documentation cannot be provided, it may make the IRS want to dig deeper.
If you’re worried about your tax returns and whether or not you need to file an amendment, contact our office in Joplin, MO today. Our team of Certified Public Accountants will work with you to make sure you have what you need.