Got Doubts About Your Tax Returns?

Am I entitled for a bigger refund? “IRS statistics show that 35 percent of all submitted personal tax returns have at least one mistake that affects the taxpayer negatively.” 
 

If any of the following applies to you, please consult with our advisors for immediate consultation. Your refund could be bigger!!

  • Home purchase: Closing costs, points paid, origination fees are deductible. HUD-1 closing statements, seller credits-change in cost basis affect tax liabilities.

  • Stock trades: IRS regulation change in cost basis reporting. Multiple trades from different lots, incorrect cost basis reporting due to reorganization, splits, reverse splits, all carryover to loss reporting.

  • Start/end a business: Accounting method strategy, deductible start-up costs, capital assets reporting, ordinary income/ loss versus capital income/loss, NOL net operating loss, and industry-specific deductible expenses.

  • IRA/pension distribution: Exclusions/exemptions on qualified distributions, 10% penalty assessment, substantially equal payment rules, 60 days/12 months rule, hardship withdrawals-foreclosure and eviction prevention.

  • Married/divorced: Filing status change, married filing separate versus head of household, community property, RDP registered domestic partner- California Family Code.'

FAQs - Amending Your Tax Return

It can happen to the best of us. You just filed your tax return and realized that you made a mistake. Don’t panic. According to the California Society of CPAs, you can file an amended return to correct your error. Here are the answers to questions that are often asked about filing an amended tax return. (www.calcpa.org) 

  • You should file an amended return to correct data or add missing information concerning your income, deductions, credits or dependents. An amended return can also be used to change your filing status. If you are married and filing separately, you can amend your return to filing jointly. However, you cannot switch from filing jointly to filing separately once the time for filing the return for either spouse has expired. 

  • If you made a simple addition or subtraction mistake, there’s no need to amend your return. The IRS says their computers will detect the error and adjust your return automatically, and then notify you. 

  • There is a good chance that the IRS will eventually discover your error and bill you for additional tax due. The faster you correct an underpayment, the less interest you pay. 

  • To amend a return, use Form 1040X, Amended U.S. Individual Tax Return. To correct a previously filed return, use Form 1040, 1040A or 1040EZ. Also, use this form to amend individual income tax returns submitted through TeleFile or e-file. You cannot e-file an amended return. You can find Form 1040X and instructions for completing it on the IRS website (www.irs.gov) or by calling 800-829-3676. Form 1040X asks for the information you originally reported, your corrected information and the reason for the changes. There is also a section for adding or subtracting personal exemptions. Be prepared to submit any other affected tax forms, such as Schedule A, if you’re adjusting any of your itemized deductions, and Schedule D if you had qualified dividend income or long-term capital gain income. At the top of Form 1040X, be sure to enter the year of the return you are amending. If you are amending more than one tax return, use a separate 1040X for each and mail in separate envelopes to your assigned IRS processing center. The 1040X instructions list the addresses for the centers. 

  • Generally, Form 1040X must be filed within three years after the date you filed your original return or within two years after you paid the tax, whichever is later. A return filed early is considered to be filed on the due date. So if you filed your 2003 tax return on February 1, 2005, you have until April 15, 2008, to amend it. Taxpayers who are filing an amended return to claim a bad debt or worthless securities have seven years after the due date of the return for the year in which the debt or securities became worthless. If your amended return results in an additional refund, the IRS requests that you wait until you have received your original refund before filing Form 1040X. You may cash the original check while waiting for any additional refund. 

  • If any changes affect your adjusted gross income, you would want to amend your state return as well. Contact your state tax department for forms and directions or go to www.ftb.ca.gov if you pay California taxes. 

  • The fact that you file an amended return does not, in and of itself, increase the likelihood that your return will be audited. But it does mean that the IRS will be taking a second look at your return. To help ensure that your amended return is in order, you may want to consult with a CPA or EA. Call toll free to make an appointment with us today 888-770-3077.