There's an old tax myth that filing an amended tax return will get you audited. Not true. In fact, failing to correct an error you made on your original tax return is more likely to cause you more tax trouble. When the Internal Revenue Service discovers the mistake, and the agency likely eventually will, you'll owe the tax due and penalties and interest. And if you fail to claim a tax break on an amended return that you overlooked when you first filed, then you're the one cheating yourself out of tax savings. An effort worth making: I know, dealing... Read more →
Errors
This post was updated Tuesday, Feb. 21, 2017 Fake news. Alternative facts. We've all grown familiar with, and perhaps a big inured to, such phrases of late. Spinning language is something politicians have done for, well, forever. And it's not limited to just news. At tax time we hear a lot of things, especially on the internet, that we hope will help us make wise decisions when we file our taxes. But some of it is wrong. To fight this trend of alternative, fake tax facts, as well as brighten up your day a bit, I thought you might enjoy... Read more →
Tax Day is almost here. If you're one of the millions still to file, I understand. No judging here. I'm part of the last-minute tax crew, too. The key as April 18 nears is not to panic. If you freak out while doing your taxes, you'll likely make a mistake (or two or …) that could be costly. Source: Reddit.com So that you don't end up writing a check like the one above, here are 10 common tax-filing mistakes to avoid. 1. Math miscalculations -- This is the most common tax mistake every filing season. It includes addition, subtraction, percentage... Read more →
We're now into the single digit countdown (you are watching the clock in the right column, right?) to the April 18 tax return (and due tax payment!) deadline. That means millions of us are starting to get a little frantic. And that can be really, really bad when it comes to taxes. If we tackle our returns in the same state as this faux Grumpy Cat, we'll make the same costly mistakes he's bragging about to his neighborhood bar buddies. So take a breath. Put down the Cosmo (or whatever adult beverage you prefer) and cigarette. Tax tips time: And... Read more →
Hello 2016! Some of us (not me) got up early to welcome you. Others (me, as you can tell from the posting time on this item) are still easing into this brand new year. But one thing that most of us soon will be doing, regardless of our post-New Year's Eve celebration energy level, is making New Year's resolutions. Yeah, I know making resolutions is the annual, and usually temporary, victory of hope over experience. Most of our attempts to make ourselves and our lives better, at least within the strictures of quick and catchy Jan. 1 lists of goals,... Read more →
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. 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... Read more →
You filed your tax return. Now the Internal Revenue Service has questions about your Form 1040. While hearing from the tax collector about your return is always a little unnerving, it doesn't necessarily have to be a big deal. A notice does not mean you are under audit. Neither does it mean that your return was incorrectly filed. And in many cases, any issues the IRS has with your 1040 can be quickly resolved. Here are 10 tips to help you deal efficiently and effectively with an IRS notice or letter. 1. Don't panic. You are not alone. The IRS... Read more →
This post was reviewed and updated Wednesday, April 5, 2017 A sin of omission basically is a failure to do something you can and should do. They happen all the time in our daily lives, often inadvertently. Even, or many would say especially, at tax time. Tax sins of omission typically are failing to claim tax breaks for which we're eligible. And while the annual April consequences of overlooked tax breaks aren't quite as severe as their Biblical counterparts, tax sins of omission could be very costly. To ensure that your annual interaction with the Internal Revenue Service this year... Read more →
In addition to updating tax forms and instructions and getting its computer systems ready for the Jan. 20 start of the 2015 tax filing season, the Internal Revenue Service has been touching base with tax preparers who've had some recurring problems with some returns. Rather than penalizing the tax pros who have filed questionable claims for clients, the IRS is, for now, opting for pre-season tax filing reminders encouraging more diligence and a little bit of homework. In November 2014, around 2,500 preparers (according to Kiplinger Tax Letter) received letters recommending the recipients, in the IRS' words, "consider taking continuing... Read more →
The year's second tax-filing deadline isn't as much fun as Sharknado 2, but for many taxpayers it can be just as frightening as the campy Syfy channel classic. Folks who've put off filing until the absolute last minute -- and I must admit I was one of the millions of procrastinators, filing our 2013 federal return just last week -- often find themselves still working on their taxes on Oct. 15. That's OK. You have until midnight local time to e-file it. Or until your post office's last mail pick-up for an Oct. 15 postmark if you're sending paper forms.... Read more →
If you just discovered an error on an old tax return, you might be able to correct it. All you need is Form 1040X … as long as the mistake was made on a return you filed within the last three years. Click image for PDF download of full Form 1040X. Details on filing an amended tax return, which is what you'll do with Form 1040X, are found in the Weekly Tax Tip. I'll let you check out the full tip at your leisure, but here are five key things to keep in mind. First, note the three-year time limit... Read more →
Your federal income tax refund finally arrived and it was less than you expected. What's the deal? It could be debts you owe. The U.S. Treasury, which is boss to the Internal Revenue Service, is able to nab part or all of your refund to pay some outstanding federal or state debts you have. This ability comes thanks to the Treasury Offset Program, or TOP, which is run by the Bureau of Fiscal Service, or BFS. Debts that are collected this way typically include past-due child support, unpaid student loan amounts and due state income tax. Since 2010, TOP also... Read more →
It's one day until the tax filing deadline. Are you panicking yet? Don't. You've got time. Technically, we have a day and a half (sorry for not posting sooner; one of those crazy days) to get our returns done -- and by "we," I mean all y'all planning to send in a 1040 because I've already filed an extension. The Internal Revenue Service accepts as timely filed returns that are postmarked or e-filed by midnight April 15 local time, so that gives you today and tomorrow. To help you cope with any still pending tax issues (remember, tomorrow is the... Read more →
Today is Halloween, when kids and adults alike overindulge in candy, enjoy dressing up (more than usual) and generally celebrate being scared. But there's nothing like getting a letter from the Internal Revenue Service, on Oct. 31 or any other day of the year, to really strike terror in even tax-abiding hearts. I speak from personal experience. The IRS conducted a correspondence audit on one of my returns. Another year, I got a refund check that was much larger than I expected. I must admit that the extra money was scarier. The check -- pre-direct deposit days -- showed up... Read more →
The drop-dead due date for procrastinating tax filers is less than a week away. You have noticed the countdown clock over there in the right column, right? Yes, that's right, the Internal Revenue Service is working with a skeleton crew, but it expects folks who got until Oct. 15 to finish filling out their tax returns to do just that by next Tuesday. If you are an uber-procrastinator, you're pooh-poohing this post. You'll get to your 1040 on Monday, you say, or maybe Tuesday morning. Good luck with that. If you push off your tax filing too long, you'll be... Read more →
Everyone makes tax mistakes, even the Internal Revenue Service. That was again made clear earlier this month when the IRS sent some taxpayers and tax professionals notices that included an interest calculation error. The math mistakes were on CP 2000 notices mailed out the first two weeks of July and which dealt with proposed taxes due on unreported income. The IRS says the interest amount calculated on that new unpaid income amount was too low. Sorry recent CP 2000 recipients. I wish I could tell you, to borrow a Monopoly board game phrase, that the IRS error was in your... Read more →
One of the biggest frustrations this tax filing season was the processing delay of around 600,000 returns because of improperly completed education tax credit claims on Form 8863. Although the Internal Revenue Service didn't provide any details on where the returns in question came from, many of the problematic forms were prepared by H&R Block. The Kansas City-based tax preparer didn't get specific either, but it acknowledged the error in its blog. Bill Cobb, the company's CEO and president, soon thereafter issued an online apology to customers. Now the tax preparation giant is saying it's sorry with cash. OK, with... Read more →
Everyone makes mistakes now and then. (Don't tell the hubby that I admitted that!) When it comes to mistakes on tax returns, the Internal Revenue Service gives us a second chance, up to a point. As this week's Weekly Tax Tip notes, sending in a corrected tax return via Form 1040X is not that difficult. The IRS wants to know what you originally reported, what your corrected numbers are and why you are making the changes. You can add or subtract personal exemptions if on your original 1040 there was some confusion as to whether you properly claimed a dependent.... Read more →
One of the main reason people put off doing their taxes is their fear of making mistakes. One error, whispers that voice as soon as you start working on your 1040, and the Internal Revenue Service will jump all over it, send you nasty letters, audit your return, make your life hell. Take a breath. Most of the time when the IRS finds an error on a tax return, especially a math mistake, it corrects it for you. Sure you'll get a notice of the change, but this correspondence tends to be more boring than totally terrifying. Still, you don't... Read more →
The tax world consensus is that if Mitt Romney doesn't win the White House, he'll amend his 2011 return to recoup the tax savings he surrendered in order to make his effective tax rate reach 14.1 percent. Some calculators say that the Republican presidential candidate's tax rate would have been closer to 9 percent if he'd taken all the deductions for which he qualified. When asked if Romney might file an amended return and claim the $1.77 million in charitable donations that he and the missus didn't include on their Schedule A, thereby getting a nice refund check of around... Read more →