by Laurie Mueller

Created on: June 26, 2008

Amending your tax return
Everybody makes mistakes. Even the IRS realizes that, and has provided a special form for taxpayers to fix theirs, form 1040X. While it might seem intimidating to tell the IRS you were wrong, it's better to fix your mistakes than wait for them to be found. Besides sometimes those mistakes are in your favor and you can get some of your money back from the IRS. If they're not, the IRS will assess interest and sometimes penalties on what you owe, so it's best to correct the problem as soon as your realize there is one. Generally you have three years from the filing date to amend a return.

Filling out the form 1040X is a lot easier than it looks. The form can be used to correct filing status, deductions, income or expenses. Column A is filled in with amounts on your original or previously amended return. Column C is the correct amount and Column B is the difference. Make sure to carry the totals down and sign the amended return.

When sending the return to the IRS, include a copy of all Schedules and additional forms, even those that haven't changed. If you don't, you'll get one of those notices we all hate.

Tax laws change every year and there is an entire industry dedicated to keeping tax professionals current, and updating the software they use. Take advantage of it by having those returns checked. If you're doing your own taxes this is a good way to insure that your tax knowledge is current. I had a relative who had been doing their own taxes for years. When her husband was ill she asked me to do their taxes. I noticed that they had not claimed any tuition credits for their daughter in college. When I asked about it, she told me that they had thought they didn't qualify and had never claimed the credit. When they amended the previous three years returns they got back over $5000.00 for those college credits.

Even professionals make mistakes, or miss asking the right questions in a tax interview. If you have your taxes done professionally take them to a different company for the review. The tax preparers at these places are less busy in early January and late March so you're likely to get more attention if you go then. If there is an error make sure the refund is more than the fees, in many cases you don't need to file the amendment and your want the most money possible in your pocket. If there is no error then you have added peace of mind. Either way you can learn valuable data for doing your current or next years taxes.

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