If you made a mistake on your tax return, you have good reason to worry. Errors made often delay the time it takes to receive your tax refund, and in some cases it can even results in IRS notices showing up in your mail. However, there are no mistakes that you can't easily repair, especially this early in the game. You can Avoid IRS Lien issues with ease and Stop IRS Taxes before they start if you work fast. It's hard to Remove IRS Lien issues, but it is possible.
Top 5 Reasons to File an Amended Tax Return
You can correct your mistakes by filing IRS Form 1040X, Amended U.S. Individual Income Tax Return. According to the IRS, these are 5 reasons why you should file an amended Return:
1. You failed to report all income made: The IRS wants to know about every cent you make. This includes money made from selling your business, working a second job, or working as an independent contractor.
2. You claimed deductions or credits that you shouldn't have: Now is the time to make amends if you're worried about your bold tax deductions. Remember, large deductions are an IRS red flag, create a higher risk for an audit. Additionally, you shouldn't claim any credits unless you are positive that you qualify.
Small Business Owners Beware: Small Business and Self-Employed individuals are purported to be the leading contributors to the huge $343 billion dollar tax gap for 2009. The IRS aims to close the gap, and they're swooping down on small business with a vengeance to do it. The IRS's Budget FY 2009 includes plans to increase reporting for small businesses and self-employed individuals. The IRS plans to increase audits for large corporations. This means small business owners need to take extra precautions and amend their returns if they claimed deductions or credits they shouldn't have.
3. You neglected to take advantage of deductions or credits that you could have claimed: There are plenty of new tax credits and deductions to take advantage of this year. If you missed out on any of the new opportunities listed below, don't hesitate to file an amended tax return. Just be sure to double check with a tax professional to make sure you qualify.
First-Time Homebuyer Credit: If you bought a home in anytime during 2008 you may qualify for this $7,500 credit.
The Recovery Rebate Credit: If you didn't receive last years' Economic Stimulus payment or the full amount for the Stimulus payment, you may qualify for the Recovery Rebate Credit.
Standard Deduction for Real Estate Taxes: Starting 2008, you can take advantage of an additional standard deduction. This is based on state or local real estate taxes paid in 2008. The maximum deduction is $500 filing single, $1,000 for joint filers.
Mortgage Workouts and Foreclosures: In response to the increase in foreclosures, mortgage workouts and foreclosures are now tax free for the majority of taxpayers. This means eligible homeowners don't have to include debt forgiven on their homes. The maximum balance on the loan is as high as $2 million for taxpayers filing jointly, $1 million for married filing separate returns.
4. You need to file with a different filing status: It's easy to file with a different filing status if necessary. For example, you might have filed as Head of Household, but realized that you don't exactly qualify for this status and you've already send out the return.
Important Note: Did you file jointly with your spouse but you want to change to married filing single? It's too late to do that if you already sent you taxes in by the deadline. As an exception, an executor may be able to make this change for a deceased spouse.
5. You can take advantage of the First Time Home Buyers Credit: If you bought a home last year, you can qualify for the First Time Home Buyers Credit, even if you purchased the home early in the year. You also have the option of including this on your 2009 tax returns.
What about my refund?
If you have to file an amended return, this could change the amount of your refund. This means it's likely to delay the refund amount. For everyone else who wants to know the status of their 2008 refund, the IRS has three options available.
Three Options for Checking on your Tax Refund status
In order to receive an update on you return from either the automated phone number or directly from the IRS, you'll need to know the following information:
Your filing status, Social Security Number (the first one listed on the return) and the exact amount of your Tax Refund. All of this information is available on your 2008 tax return.
