Aug 01, 2018
By Hayley Norton, CPA Manager at Terry Lockridge & Dunn
Whether it makes sense to amend your return depends on which of these situations you are in:
If you owe the IRS
If you discover an omission on your tax return that results in you owing additional tax, you need to correct it with an amendment and provide the tax due.
Do not delay if this is your situation. If the IRS discovers the omission before you do, they may add interest and penalties to your bill.
If you are due a refund
If you find a mistake that should result in getting a larger refund check, you can claim it by filing an amended return. But there are several reasons it may not be worth it.
- It may open a can of worms. In many cases, amending your federal return means also amending your state returns. Multiply the hassle if the error spans across two or more years.
- It puts a spotlight on you. While your original return may have passed through the IRS's automated system without a hitch, now that it is amended you can virtually guarantee it will get a closer look. If you have anything else in your return that can trigger an audit, like business deductions, charitable donations, or other credits, this can be a concern.
- It stretches out the audit window. The IRS generally has a three-year window to audit returns and request changes. When you file an amendment, you extend the audit time frame.
- It may be too late. Depending on when you notice an error and how far it goes back, it may be too late. The deadline to file an amendment is generally the later of three years after the original return was filed, or two years after the tax for that year was paid.
If you are due a refund, and do not have exposure to adverse adjustments, contact your accountant to amend your tax return as soon as possible.
For help with an income tax return amendment, or other tax questions, feel free to reach out to Hayley at email@example.com, or contact your accountant in Cedar Rapids at 319-364-2945 or in Iowa City at 319-339-4884.