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Amended tax return CPA discusses IRS Form 1040-X | reasons to file an amended tax return

Amended tax return CPA

When the IRS receives an Income document you didn’t list on your original 1040, they want tax on the entire amount. Filing an amended tax return can generate a refund by presenting both the income and expense figures. (910) 399-2705.

Amended tax return CPAs see a variety of situations where Clients could and should amend an earlier tax return. In this post I’ll deal with IRS Form 1040-X, which you’d use to amend a personal tax return.

Typically an amended tax return Client calls because they’ve received an unpleasant IRS Notice, like CP-2000, which “proposes” changes to your original Form 1040. The “changes” mean more tax. The IRS received some income related document that wasn’t included on your original Form 1040. You must report the income but have the right to claim legitimate deductions and tax credits. The IRS doesn’t have all the information. You need to present the expense figures to them. Remember your State may follow suit.

Here’s what I’m seeing thus far in 2013:

Form 1099-C, cancellation of debt: clients don’t receive this form because they’ve moved and don’t know enough about debt cancellation to proactively obtain a copy. Cancelled debt on Form 1099-C  becomes taxable income on Form 1040. But Form 982 offers multiple conduits to exclude cancellation of debt from taxable income. So instead of paying income tax on the entire amount of cancelled debt, we’d file Form 1040-X to include Form 1099-C and Form 982.

So an amended tax return can generate a refund in some cases.

1099-A (Acquisition or Abandonment of Secured Property): when a creditor takes control of an asset they report it to the IRS on Form 1099-A. Even though you might not think of this as a “sale” of the asset, the IRS does. So they want to tax you on the entire amount of the “sale.” Here we’d File Form 1040-X to amend your original Form 1040 to include Form 4797. Especially in the recession, it’s likely you’ll a loss on the “sale.”

So an amended tax return can generate a refund in some cases.

1099-MISC, subcontractor income: you did work for somebody or some company and they filed Form 1099-MISC and reported it to the IRS. You didn’t claim it as income on the original Form 1040. The IRS wants you to pay income and self-employment tax on the entire amount of income. Here amending the tax return through Form 1040-X to include Schedule C. Schedule C  shows the income and expenses of your small business.

So an amended tax return can generate a refund in some cases.

Form 1099-MISC, rental property income: somebody or some company sent a Form 1099-MISC showing they paid you rent. Here you’d file an amended tax return using Form 1040-X and Schedule E. Schedule E presents the rental property income and associated expenses.

So an amended tax return can generate a refund in some cases.

Form 1099-B, Proceeds From Broker and Barter Exchange Transactions; here the IRS received information on a stock transaction that wasn’t on your tax return. Naturally the IRS assumes the entire sale amount is taxable income. This situation was so common the IRS passed new tax regs to remedy the situation. Here you’d File Form 1040-X with Schedule D. Schedule D shows your stock sales and the purchase price. generate a refund.

So an amended tax return can generate a refund in some cases.

Form 1099-S, real estate sale: your broker reported a real estate sale to the IRS. The IRS wants taxes on the full amount. You probably didn’t include Form 1099-S on your original tax return because of the well-known $500,000 capital gains exclusion from the sale of a primary residence. Here an amended tax return includes Form 1099-S and Schedule D.

Our virtual office allows me to amend your tax returns wherever you live. If you like what you read, distance isn’t a factor in serving you. (910) 399-2705.

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