How to Fix Tax Return Errors

Suppose you discover a mistake or omission of an item
on the 2011 federal tax return you recently filed.
Should you ignore the error? Although it can depend on
the nature and significance of the item, the answer is
generally “no.” But the matter may be resolved by filing
an amended 2011 return.

Clearly, you should file an amended return right away
if you’ve paid less tax than the amount you actually
owe for 2011. If the IRS eventually detects the mistake,
it can require you to pay the difference in tax liability
plus substantial interest and penalties. As a general
rule, the IRS has three years in which to audit a return,
but the statute of limitations is extended to six years
if you underreport income by more than 25%. And there’s
no time limit if fraud is involved.

When a change works in your favor, consider all the
ramifications. If you stand to receive only a few extra
dollars back, it’s probably not worth the effort. This
also gives the IRS another chance to scrutinize your
return. On the other hand, if you expect a sizable refund
in return, it usually makes sense to pursue this action.

One of the common reasons for amending a return is to
change your tax filing status or dependency exemptions.
For instance, there could be some confusion over
claiming exemptions for children following a divorce.
Similarly, you may have overlooked special deductions
or credits available on 2011 returns.

If you discover an error or missing information on a
return you already filed, give us a call. We can review
the situation with you and help you file an amended
return if necessary.

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