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NYC attorney pleads guilty to amended tax return fraud
Plus 10 tips on fixing your federal filing mistakes with Form 1040X

Taxpayers usually file amended returns to correct mistakes they made on their original tax paperwork.

A New York City product liability attorney, however, sent the Empire State tax department fraudulent amended tax returns and now is looking at prison time.

Prisoner_creative commons

Jeff Galloway, formerly a partner at Hughes Hubbard & Reed, partner pleaded guilty on June 4 to one felony count of criminal tax fraud.

No returns, followed by false amended forms: The New York County District Attorney's office says that between 2005 and 2010, Galloway failed to file state personal income tax returns and pay taxes owed on around $1 million.

New York State Department of Taxation and Finance investigators approached Galloway in April 2012 about the oversight, at which time the attorney claimed that he had filed his tax returns, but that he had made a typographical error in entering his Social Security number.

Galloway then filed fraudulent, amended New York personal income tax returns for the years in question, says the DA's office. But instead of correcting the purported tax identification number mistake, Galloway filed fraudulent amended returns, claiming excessive deductions for items such as rent for all four of his residential apartments in Battery Park City and monthly garage fees to park two of his personal vehicles in Manhattan.

Under the plea deal, Galloway must pay $600,000 in taxes, resign from the bar, and serve three months in jail. He will be officially sentenced on July 22.

There's no word from New York officials on whether Galloway has similar issues with Uncle Sam. I would not be surprised, though, to learn that Internal Revenue Service is checking the lawyer's federal filings for the years in question.

Fixing federal tax return mistakes: Filing an amended return is a great way to correct mistakes you made on your federal Form 1040. It's generally an easy process and is used most of time by taxpayers who discover that they shorted themselves some tax refund money.

But even if you find that correcting an error will cost you a bit more in taxes, it's wise to fix the mistake as soon as you discover it. That way you stop the accrual of tax penalties and interest on the underpayment, which the IRS probably will eventually catch.

The form you need to fix any tax errors is 1040X.

Form 1040X header
Click image for PDF download of full Form 1040X.

There's nothing particularly mysterious about this X filing. You do, however, have to follow some rules. Here are 10 tips to help you file an amended tax return.

  1. Use Form 1040X. Yeah, I know I just said that. But it's worth repeating since it is the only form you can use to make corrections to previous filings.
  2. Form 1040X cannot be electronically filed. The IRS is working on getting the amended return form into its e-filing catalog, but until then you'll have to snail mail the form. The mailing addresses can be found on the last page of the 1040X instructions book.
  3. You usually should file an amended tax return if you made an error claiming your filing status, income, deductions or credits on your original return.
  4. You normally don't need to file an amended return to correct math errors. The IRS will automatically make those changes for you. Also, do not file an amended return because you forgot to attach tax forms, such as a W-2 or schedule. The IRS will usually send you a request for those.
  5. You usually have three years from the date you filed your original tax return to file Form 1040X to claim a refund. You can file it within two years from the date you paid the tax, if that date is later.
  6. If you are amending more than one tax return, fill out a 1040X for each year. You should mail each year in separate envelopes. Note the tax year of the return you are amending at the top of Form 1040X.
  7. If you use other IRS forms or schedules to make changes, make sure to attach them to your Form 1040X.
  8. If you are due a refund from your original return, wait to receive that refund before filing Form 1040X to claim an additional refund. The bad news is that amended returns can take up to 12 weeks to process. The good news, however, is that you can go ahead and spend your original refund while you wait for any additional tax cash.
  9. If you owe more tax, file your Form 1040X and pay the tax as soon as possible. Yeah, this is repeat, too, but also crucial. By correcting an error that means more tax due as soon as you can, you will reduce any interest and penalties.
  10. You can track the status of your amended tax return via the IRS' online program Where's My Amended Return? or by calling 866-464-2050. You should wait three weeks after you file your 1040X to start bugging the IRS.

You also can find more about filing an amended tax return in my story for Bankrate.com, which is this week's Weekly Tax Tip.

Here's hoping you don't ever make any tax filing mistakes. But if you do, here's hoping any corrections will work out to your tax advantage.

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