Have you filed your 2004 tax return yet?
If so, doesn't it feel good to get that chore over with?
Ah, yes -- another tax return filed, another tax return "in the books."
Well, I've got a pleasant surprise for you.
Did you know you can actually get a refund for a return that you already filed?
Yep, it's true.
If you think you forgot a deduction on a previously filed return, you have three
years to tell the IRS about it and receive a refund.
Here's how it works: You can file an amended return up to three years after the
due date of the return in question.
So, for Year 2004 returns due April 15, 2005 -- you have until April 15, 2008 to
file a correction.
For Year 2003 returns due April 15, 2004 -- you have until April 15, 2007 to
file a correction.
For Year 2002 returns due April 15, 2003 -- you have until April 15, 2006 to
file a correction.
And for Year 2001 returns due April 15, 2002 -- you have until April 15, 2005 to
file a correction.
Now the question becomes: Is it worth it? I mean, do you really want to spend
the time and energy doing tax paperwork -- isn't just doing one return per year
enough!
I know, I know -- you've got better things to do with your time.
So here's an incentive to make it worth your time: If I offered you a little
part-time job that paid about $140 per hour, would you be interested? I think
so.
Well, that's how you should look at the task of filing an amended tax return. Do
the math:
You discover $1,000 of unreported deductions on your return from Year 2000, 2001
or 2002. So you do the research, prepare the proper forms (or have your
accountant do it), and send them off to the IRS.
If you are in the 35% tax bracket (say, 30% federal plus 5% state), you will get
a $350 refund for your efforts. And even if it took you 2.5 hours of paperwork
drudgery, Uncle Same just paid you a cool $140/hour. Not bad, eh?
Filing Amended Returns
To file an amended federal income tax return, here are the links to the
necessary forms:
Form 1040X -- in pdf format:
http://www.irs.gov/pub/irs-pdf/f1040x.pdf
IRS instructions for Form 1040X:
http://www.irs.gov/pub/irs-pdf/i1040x.pdf
You should also file an amended state return (assuming your state has an income
tax). For a link to a database of all state income tax forms, check out:
http://taxes.yahoo.com/stateforms.html
Don't forget: if you're able to find $1,000 worth of unreported deductions on
one previously filed return (resulting in tax savings of $350), there's a good
chance the same situation exists for the other 2 "open" years.
End result: $350 x 3 = $1,050 in total tax savings...
...Hmm, mmm, good! Now that's a tasty little morsel!
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