Liabilities are accrued when a taxpayer has failed to file an income tax return or when the IRS files a Substitute for Return ("SFR") or "force files" for the taxpayer. The IRS will file the form 1040-X return on the taxpayer's behalf, giving them zero deductions, exaggerating the liability, and placing the taxpayer in the highest bracket possible. Most people would not file this way, and this may cause large balances for every year an SFR is filed.
We can help by amending IRS returns accurately, which, at times, can wipe out the debt entirely and, in some cases, will even result in a net return to the taxpayer.
IRS Form 1040-X is the form that you use to correct or amend your tax return for the current tax year. You can show the IRS the changes you made to your amended forms, as well as the correct tax amount, which could make you eligible for a tax refund.
You will need to fill out separate Forms 1040-X if you are preparing more than one year's worth of returns. Also, you will need to include any schedules or forms affected by the changes.
You must file Form 1040-X if you want to receive money back within three years of your original filing or two years after paying the tax.
After receiving your return, the IRS will send you an amendment/refund if you are due one or a change in filing status notification. Send the IRS the amount due along with the 1040 x form if you owe taxes.
It's a good idea to go through your original return before deciding to amend it. There are certain areas that may have been overlooked:
These items will be required to support the modifications to your form 1040 x return:
A person with a simple situation and minor changes may be able to qualify for amended returns on their own. Much major software includes modules that allow you to file for amended returns. Many professional preparers will also file amended returns.
Modifying your federal tax return may also require you to modify your state tax return. Find out if your preparer charges extra for an amended tax return.
You can track the progress of your amended federal return with the IRS's online tracking tool:
If you find out after you have already filed that you forgot to include income on your return (for example, from a Form W-2 or 1099), or if you get a corrected information statement that has different amounts of income or withholding, you will need to get an amended return to fix the error.
If you don't revise your return and you wind up owing more money in taxes, the IRS will most likely give you a CP2000 notice, which may come with severe penalties.
You don't need to amend your return if you make math mistakes; the IRS will correct your filing errors. Other situations where amendments aren't necessary include:
If you paid or accrued foreign taxes to a foreign country or U.S. possession and are subject to U.S. tax on the same salary, you may be able to take either a credit or an itemized deduction for those taxes. File Form 1116, Foreign Tax Credit, to claim the credit if you are an individual, estate or trust.
Filing for your tax amendment, online, or in paper form, takes a significant amount of time, and in order to avoid penalties and interest, it is vital to act swiftly. A professional can help figure out the status of your state tax liability and ensure your amendments are filed correctly.
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