Most people are aware that filing a tax return with false or inaccurate information can get you in trouble, but sometimes it can happen accidentally or because you didn’t get the right information. In these situations, it may be necessary to file an amended tax return. If the Internal Revenue Service notices a mistake and sends you a letter outlining the changes they have made and the related additional tax liability, you do not have to file an amended tax return if you agree with their assessment. However, if you believe it is in error, the next step might or might not entail an amended tax return, and your tax accountant can help you determine the right way to proceed. There are many different reasons to need an amended tax return. Here are just a few:
1. You find out after filing that how someone else filed their return has an impact on yours. For example, two parents cannot both claim the same child as a dependent, so one will need to file an amended tax return. Another example is a married couple that files separately, which requires both to file using the standard deduction or both doing itemized deductions.
2. You receive an amended 1099 or W-2 after filing your return. Often, these will be resolved by the IRS, but you can also file an amended tax return to reflect the information on the new statement you have received. If it will result in a refund, you can speed that along by filing the amended tax return.
3. You learn about a deduction you didn’t realize you could take. A comprehensive consultation with your tax accountant will avoid this happening, but if you do miss something, an amended tax return can be filed within the time period allowed so you can get a refund.
4. You forgot about some income that wasn’t reported on a 1099 or W-2. Just because you don’t receive a statement, that doesn’t mean the income isn’t taxable. In fact, even money obtained illegally is technically taxable. In addition, since companies do not have to send a 1099 for amounts under certain thresholds, it is up to you to include those amounts from your own accounting.
These are just a few examples of situations in which an amended tax return is needed. If you have a situation where you need one done or suspect you do, give us a call at Proctor & Assocs. We are happy to review your previous return whether we prepared it or not and advise you whether an amended tax return should be filed.