Tax Tips: Amending tax returns

If you find an error or an item omitted from a prior year's tax return, you can file an amended tax return for up to three years after the original filing due date. If omitted an item that causes you to owe more taxes, you should definitely do this before the IRS catches up with you. The longer you go without paying, the more you will owe in interest and penalties once you finally do file and pay.

But if you've forgotten items that would have lowered your taxes, you have to weigh the options before you file. Sometimes the amount the IRS would refund to you will be much smaller than the fee to have a tax preparer do the amended return, in which case it doesn't make sense to file. Let the IRS keep your money and save the tax preparer fee.

It might also make sense to not file if the additional item you want to deduct is something that might cause you to be audited or otherwise examined. If you've been honest in filing your taxes and you have all relevant documentation, you should pass the audit with flying colors. However, some taxpayers don't even want to have to deal with the hassle or are worried that they may just be calling more attention to their tax returns.... In which case they might not file the amended return to take the additional deduction.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Top Five Ways to Avoid a Tax Audit

If the IRS does decide to audit you, there is little you may do to stop it. You may, however, reduce the odds that you will be singled out for that extra attention in the first place.

Read More

Brought to you by TurboTax.com

What Filing Status Deducts the Most Taxes?

Your filing status can make a big difference in how much income tax you pay. If you make $40,000 a year, for instance, the amount of tax you will pay depends on which filing status you qualify for. The difference in tax rates are significant and can mean the difference between paying up to 15 percent or 25 percent. Your decision to file single, jointly or as head of household will also affect the size of your standard deduction.

Read More

Brought to you by TurboTax.com

Are College Entrance Exams Tax Deductible?

The fees for taking SAT, ACT and other college entrance exams are not tax-deductible, but the federal government does allow a number of educational deductions and tax credits. Find out more about these educational deductions and credits and how they can benefit you.

Read More

Brought to you by TurboTax.com
Read Full Story