Archive for April, 2012

Do You Need To File An Amended Tax Return????

Saturday, April 14th, 2012

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice.

If there are any errors in your current or prior year tax returns, the tax returns for that tax year should be “amended” (updated or corrected).  While this statement is also true for payroll tax returns, it it beyond the scope of this article.  There are many reasons for amending a personal (individual) tax return, including:

1.  You have made a math or clerical error.

2.  After you have filed your tax return you received either a new or “corrected” form from your investment firm (1099 B or K-1), your retirement plan trustee (1099 R), a financial institution (1099 INT or DIV), your employer (W-2), an income source if you are self-employed (1099 MISC), or your mortgage lender (1098).

 To paraphrase a commercial from a well-known technology product, while there’s not “an app for that” yet, there is a form for it.  The form for an individual income tax return is Federal Form 1040-X.  Here is the link to the form:  and the related instructions:    Part I is for data entry, Part II relates to the “Presidential Campaign Election Fund” voluntary donation, and Part III is for you to provide an explanation of the error(s) or change(s).   The instructions for this section are found on page 11.  You should only provide direct, brief, factual statements.  There is no requirement for you to provide a profound apology or provide unrelated facts.

While the form is already included with almost all tax return preparation software (which greatly simplifies the math calculations), you can also use the link in the above paragraph from the IRS website:    The form can not be filed electronically (yet). 

While other tax practitioners may disagree with this recommendation, my past experience and communications with other tax preparers has caused me to believe that unless you owe additional income taxes, wait until sixty days after you have filed your current year tax return (which includes extensions) before you submit the Form 1040-X.  This allows the IRS to process your original return before they receive the amended return.   

If you owe additional taxes, you can amend your current year tax return immediately to reduce the additional associated interest and penalties which may be assessed.

Finally, if you reside (or are a legal resident of) a state which has an individual income tax, be sure that you also amend your state income tax return for the same year. (more…)

What Should You Do IF You Can’t Pay Your Taxes When Due???

Tuesday, April 3rd, 2012

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice.

 Over the span of many years I have often been in the unfortunate situation in which I was working with someone who was tasked with solving (or resolving) a problem who honestly believed that “If we just ignore the situation, it will go away!”   This foolhardy logic is obviously  rarely,  if ever, true for almost all of the similar situations in our lives, and it certainly is not true when it involves the payment of our tax liability.  “Tax liability” in this context refers not only to income taxes, but sales taxes, payroll taxes, estate taxes, gift taxes, etc. 

If you have a significant amount of taxes which are owed but for which you do not have the financial resources to pay, consider contacting an attorney/CPA or a CPA who specializes in tax law and who has an extensive experience base in negotiating favorable terms for taxpayers with the Internal Revenue Service.  However, avoid contacting anyone who advertises in any medium in which they offer to negotiate on your behalf to pay just pennies on a dollar for the taxes that you owe.   

There are also other options which may be available to you for smaller amounts of taxes which are due, but for which you can not pay: (more…)