Tips on Filing an Amended Return

Tips on Filing an Amended Return

What should you do if you already filed your federal tax return and then discover a mistake? Don’t worry -- you have a chance to fix errors by filing an amended tax return. Here are 10 tips from the IRS about filing an amended tax return.

1. Use Form 1040X, Amended U.S. Individual Income Tax Return, to file an amended tax return. An amended return can’t be e-filed -- you must file on paper.  Download and print out the form and instructions at www.irs.gov. 

2. You should consider filing an amended tax return if there is a change in your filing status, income, deductions or credits.

3. You normally don’t need to file an amended return just to correct math errors. The IRS will automatically make those changes for you. Also, do not file an amended return because you forgot to attach tax forms, such as W-2s or schedules. The IRS normally will send a request asking for those.

4. Generally, you must file a 1040X within three years from the date you filed your original tax return or within two years of the date you paid the tax, whichever is later. Be sure to enter the year of the return you are amending at the top of Form 1040X.

5. If you are amending more than one tax return, prepare a 1040X for each return and mail them to the IRS in separate envelopes. You’ll find the appropriate IRS address in the 1040X instructions.

6. If your changes involve the need for another schedule or form, you must attach that schedule or form to the amended return. You can obtain forms and schedules for past years at www.irs.gov. 

7. If you are filing an amended tax return to claim an additional refund, wait until you have received your original tax refund before filing Form 1040X. Amended returns take up to 12 weeks to process. You may cash your original refund check while waiting for the additional refund.

8. If you owe additional taxes with the 1040X, file it and pay the tax as soon as possible to minimize interest and penalties.

9. You can track the status of your amended tax return three weeks after you file with the IRS’s new tool called, “Where’s My Amended Return?” The automated tool is available at www.irs.gov and by phone at 866-464-2050. The online and phone tools are available in English and Spanish. You can track the status of your amended return for the current year and up to three prior years.

10. To use the online “Where’s My Amended Return” tool, enter your taxpayer identification number (usually your Social Security number), date of birth, and zip code. If you have filed amended returns for more than one year, you can select each year individually to check the status of each. If you use the tool by phone, follow the prompts.

The current Actor’s Tax Guide is available throughout 2013 at www.ActorsTaxGuide.com.  If you need to file a corrected return for a previous year, email me at actorstaxguide@comcast.net to get past editions of the Tax Guide, going back to 2009. 

Tax Guide available thru 2012

Tax Guide available thru 2012

 

If you filed for a six-month extension, your 2012 income tax return is due on Tuesday, October 15. You can still see my 2013 tax tips here and my mini-tips on Twitter. And The Actor's Tax Guide will be available for purchase throughout this calendar year. Go to www.ActorsTaxGuide.com

Eight Facts on Late Filing & Late Payment Penalties

Eight Facts on Late Filing & Late Payment Penalties

April 15 was the deadline for most people to file their federal income tax return and pay any taxes they owe. The IRS may assess penalties for both failing to file a tax return and for failing to pay taxes by the deadline.

Here are eight important points from the IRS about penalties for filing or paying late.

1. A failure-to-file penalty may apply if you didn’t file by the deadline. A failure-to-pay penalty may apply if you didn’t pay all of the taxes you owe by the filing deadline.

2. The failure-to-file penalty is generally more than the failure-to-pay penalty. You should file your tax return on time each year, even if you’re not able to pay all the taxes you owe by the due date. You can reduce additional interest and penalties by paying as much as you can with your tax return. You should explore other payment options such as getting a loan or making an installment agreement to make payments. The IRS will work with you.

3. The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes.

4. If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of one-half of one percent (.005) of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date.

5. If you requested the six-month filing extension in a timely fashion AND paid at least 90 percent of the taxes you owe with your request, you may not face a failure-to-pay penalty. However, you must pay any remaining balance by the extended due date.

6. If both the 5 percent failure-to-file penalty and the half-percent failure-to-pay penalties apply in any month, the maximum penalty that you’ll pay for both is 5 percent.

7. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.

8. You will not have to pay a late-filing or late-payment penalty if you can show reasonable cause for not filing or paying on time.

Note: The IRS recently announced special penalty relief to many taxpayers who requested an extension of time to file their 2012 federal income tax returns and some victims of the recent severe storms in parts of the South and Midwest. The IRS has also provided extensions to those affected by the Boston bombing. See IRS news releases IR-2013-31, IR-2013-42, and IR-2013-43.

Be Sure to Save a Printed Copy of Your Return

Be Sure to Save a Printed Copy of Your Return

If you filed your taxes electronically (as do most people these days), you should be sure to print out a hard copy of your return for your records. If you haven't done so already, make that printout now!

It's really important to have a paper copy in your files. You'll need documentation if you get audited, and there are other times when it's good to have a copy of your return handy. For example, most loan officers have no clue about how actors live their business lives. On several occasions, I have had to fax returns for one or two years as part of a loan application process. So keep a paper copy in your files.

I have no idea how long the electronic services will keep your return, but a hard copy in your own files is the best way to insure that you'll always have that information at hand. Your electronic service should allow you to print out a copy of your 2012 return at no charge. If you need to print copies from 2011 and before, check to see if they'll allow you to make a printout. The IRS will charge you $57 to retrieve and print out a return!

Remember that these electronic services may go bust. And don't trust your own computer, either. If your hard drive crashes, you could lose your records. Be safe, be retro, make a paper copy.

I’ve also seen advice that to protect your security, you shouldn’t leave your tax records on your hard drive.  Instead, download your tax records onto a flash drive and erase them from your computer. 

REMINDER: If you requested an extension to file your 2012 return, your new deadline is October 15.

Need More Time? File for an Extension -- Deadline is October 15

Need More Time? File for an Extension  -- Deadline is October 15

 

Tax returns are due in THREE DAYS!

Do you need more time to get your stuff together? Maybe you’re out of town doing a show and won’t get around to your taxes until after April 15. If that’s the case, you can request an automatic six-month extension. This year’s extension due date will be October 15. Go to www.irs.gov and find Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.” It’s a very short form -- only a third of a page. On the left side, you identify yourself and on the right side, you provide an estimate of how much, if anything, you’ll owe when you do file your return. You can file your Form 4868 electronically or on paper. Follow the instructions.

• If you send a payment with Form 4868, you should include that amount on Line 68 when you eventually file your return.

• If you miss the April 15 deadline without applying for an extension (or miss the October extension deadline), there will be penalties, which can be stiff. However, if you can show “reasonable cause” for your failure to file on time, such as serious illness, natural disaster, and the like, the IRS will consider those reasons and may waive the penalty.

This is very important: the extension gives you more time to file your return, but any taxes you owe are still due by April 15! If you delay paying your taxes, you’ll owe interest and may be charged a penalty.

The Actor’s Tax Guide offers last-minute help.  Go to www.ActorsTaxGuide.com.

Eight Tax-Time Errors to Avoid

Eight Tax-Time Errors to Avoid

If you make a mistake on your tax return, it usually takes the IRS longer to process it. The IRS may have to contact you about that mistake before your return is processed, which will delay the receipt of your tax refund.

The IRS reminds us that e-filing greatly lowers the chance of errors. In fact, you’re about twenty times more likely to make a mistake on your return if you file a paper return instead of e-filing!

Here are eight common errors to avoid.

1. Wrong or missing Social Security numbers.  Be sure you enter SS#s for yourself and others on your tax return exactly as they are on the Social Security cards.

2. Names wrong or misspelled.  Be sure you enter names of all individuals on your tax return exactly as they are on their Social Security cards.

3. Filing status errors.  There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) With Dependent Child. Most people know their status, but if you’re unsure, IRS Publication 501, Exemptions, Standard Deduction and Filing Information, can help you choose the right one. Electronic tax prep programs will also help you choose the correct filing status.

4. Math mistakes.  If you file a paper tax return, double and triple check your math. If you e-file, the software does the math for you, but check it yourself, anyway. 

5. Errors in figuring credits, deductions.  Take your time and read the instructions carefully. Many people make mistakes figuring their Earned Income Tax Credit, Child and Dependent Care Credit and the standard deduction. 

6. Wrong bank account numbers.  Direct deposit is the fast, easy and safe way to receive your tax refund. Make sure you enter your bank routing and account numbers correctly.

7. Forms not signed, dated.  An unsigned tax return is like an unsigned check – it’s invalid. Remember both spouses must sign a joint return.

8. Electronic signature errors.  If you e-file your tax return, you will “sign” the return electronically using a Personal Identification Number. For security purposes, the software will ask you to enter the Adjusted Gross Income from your originally-filed 2011 federal tax return. (Don’t use the AGI amount from an amended or corrected 2011 return.) You may also use last year's PIN if you e-filed last year and remember your PIN.

Get tax advice from The Actor’s Tax Guide at www.ActorsTaxGuide.com.

Plan Now for Next Year!

Plan Now for Next Year!

Even though you may be hot and heavy in the midst of working on your 2012 tax return, now is a good time to plan for next year, especially in the area of keeping good records of your business activities. As you go through your records for 2012, what is giving you difficulties? Are there some expenses you forgot to record, or receipts you wish you had saved? Use your experience now to make things easier for next time.

If you've had trouble accounting for expenses, maybe you need to figure out a new way to keep track of things. I've always been an advocate of hand-written, on-paper records. Even in this new age of electronic record-keeping, the most compelling evidence of your business expenses is old-fashioned: written in your own hand, and at the time the expense was incurred. If you're audited, that kind of record carries the most weight. 

As a tax preparer friend of mine says, "You can't write it off if you don't write it down!"

The process of preparing your tax return also gives you a good opportunity to analyze your business activities and plan for the future. Take another look at your professional expenses. Analyze which expenses were effective in getting work. Are you overspending in some areas that don’t really advance your career? Should you be spending more to promote yourself? 

Now that you’re thinking about what kinds of things qualify as business expenses, you can be on the lookout for deductions. At a SAG Foundation tax seminar in January, Actor and Tax Practitioner Beth Lynn Kelly said that you should always be thinking, “Is this for my career?” It’s remarkable how many of your regular day-to-day activities are also legitimate business expenses.

Get more help with The Actor’s Tax Guide, available at www.ActorsTaxGuide.com