When you need to file a late or amended tax return, confusion sets in. However, there are tips and tricks to filing even a very late tax return.
The thing to know when dealing with a late tax return is that you can file for an extension. And in today’s digital world, it’s as easy as going online. The IRS website has forms that you can complete online and e-file or, if necessary, mail in.
You must make sure to file for the extension by April 15 — tax day — so as soon as you know that you will have a late tax return, request an extension. The extension, once filed, allows you six months, or through Oct.15. You can do this whether you owe money or are due a refund (though if you’re due a refund, why wait?).
If you do owe money, the IRS will assess a fee 1.5 percent per month that you're late. Failure to file for an extension on a late tax return, however, is much worse: the penalty is 5 percent per month. If the IRS owes you money, there's no penalty for filing a late tax return and, in fact, you don’t even have to file for an extension — but know that you have a maximum of three years to request a refund that is due to you (by filing that late tax return,) and after that, the IRS is no longer obligated to return your money. The right to request an overdue refund expires on April 15.
Now, let’s say that you filed your taxes on time, but you made a big mistake. Maybe you forgot to report some of your income, or you failed to take a credit due to you. You can file an amended tax return. Once again, the IRS website comes to the rescue, this time with Form 1040X. Though you can download this form online, it cannot be e-filed; it must be mailed in. The Form 1040X is pretty straightforward. It has a section for the information from your original return and then a more detailed section for the updated information. You must explain clearly what is being changed and why.
Something to consider when filing an amended tax return is that you are not necessarily obligated to do so. If you thought your tax return was true and accurate at the time of filing, you are not required to file an amendment, but you might want to anyway, especially if it’s to your benefit. However, once you decide to amend, you must correct every mistake — you cannot pick and choose which mistakes to correct. So, if you forgot to report income and reporting it will push you over the threshold so that you now owe taxes, but you also forgot to take a credit that will save you money, you must report both mistakes and accept the outcome, whether it's good or bad.
Filing an amendment or late tax return is easy as long as you stay within certain guidelines. If your tax return is late, file for an extension as soon as possible. If you made a mistake and must file an amendment, make sure that you report all of your mistakes and not just the ones that are beneficial to you.
(Photo courtesy of patpitchaya / freedigitalphotos.net)
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