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.