Amending Income Tax Returns Can Save Thousands

Often taxpayers feel after they have filed an income tax return that they are etched in stone. Though you want this to be the case as no one likes to tax returns twice, frequently having a CPA critique your past returns, especially if you are a business owner and had returns filed by someone who is not a CPA, is often a great way to "find unclaimed money." In reviewing past business/corporate as well as personal income tax returns we have amended returns to reflect:

-Changing to an S Corporation saving approximately $20,000 on one set of returns and $12,000 on another.

-Tax deductions ranging from thousands of dollars of missed tax deductions such as business mileage.

-Thousands of dollars of missed itemized deductions such as cash and property contributions to charity, state income taxes and real estate taxes.

-Failure to claim Head of Household status, which is a lower tax bracket than filing single. Amended return saved tax dollars as well as then being able to claim additional tax credits.
-Numerous instances where we have filed amended personal income tax returns to claim Earned Income Credit, which is a credit allowed for those who have a dependent and make less than certain qualifying income levels. Amended return saved thousands of tax dollars.

These are just a few of the examples of where a CPA can evaluate past returns to "find money" that you have overpaid to the IRS or Georgia for prior year income taxes. Amended returns come in all shares and sizes:

-If you are an S Corporation you file a new Form 1120S, while marking the amended box on the first page of the return.

-If you are a single member LLC, you should be filing the business results as part of your personal return the business information on a schedule C. Therefore, like individual taxpayers you will file a Form 1040X to the IRS and Form 500X to the state of Georgia.

-Also when reviewing prior tax returns, one can look for deductions, strategic and operational issues that one can use to mitigate future tax bills and to improve overall company profitability.

Tax law only allows for returns to be amended for three years after their initial filing date. Thus, it is essential to ensure that all returns that you have any questions about whatsoever should have them evaluated by a competent and experienced CPA who is well versed in IRS tax law and representation issues. Unfortunately if you have not amended your return after three years, tax law does not allow you to receive a refund of any type or to even apply any refund application to any other outstanding monies due either the IRS or that state or Georgia. Having served as a CPA in Atlanta perhaps one of the hardest items I have had to observe is a taxpayer who takes care of and files several old tax returns at once only to discover that old returns that show tax liabilities are due and that all refunds for tax years over three years of age are forever lost.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/  (An Atlanta CPA firm) and for his latest book Overcoming Life's 9/11's: Job's Journey and to learn about his ministry visit http://www.john-dillard.com/