How to File an Amended Tax Return?

Amended Tax Return

Filing federal and state income taxes is not as simple as you would believe. It’s all too easy to make minor errors on a tax return, such as reporting income incorrectly. Here’s what to do for filing an amended tax return and the steps you need to take.

What is an Amended Tax Return?

An amended tax return is a form provided by the IRS for making changes to a prior year’s tax return. An amended return can be used for a variety of purposes, including correcting errors and requesting a refund. Depending on the sort of inaccuracy you report, amended returns might either boost or decrease your refund. Correcting misreported earnings or tax credits is an example of an amended return. Keep in mind that when attempting to fix mathematical errors, an amended return is not required; the IRS will automatically correct any mathematical inaccuracies.

How it Works?

Amended Tax Return

Every taxpayer is obligated to file their taxes for the preceding year on an annual basis. A taxpayer may discover after filing their taxes that they made a mistake on their tax return and that it has already been accepted. The Internal Revenue Service (IRS) has offered these taxpayers an alternative in this situation. Form 1040 is used to file a regular tax return; however, Form 1040X, which may be found on the IRS website, is used to file an updated return.

As previously stated, mathematical errors are not noted on amended tax returns because the IRS corrects them. After correcting the mathematical inaccuracies, the IRS will simply modify your tax liability and refund proportionately. A letter will be sent to an individual requesting any missing forms or documents in their return.

Reasons to File an Amended Return:

The reasons why a taxpayer should file an amended tax return are as follows:

  • If your filing status for the tax year changed or was entered improperly. For example, if a married couple filed jointly then divorced on the last day of the tax year, they must amend their return and file as either head of household or single.
  • You may amend your return if you recorded the incorrect number of dependents on your return. If you need to add extra dependents, you can file an amended return.
  • You may amend your return if you misreported any claimed tax deductions or credits, or if you did not claim them at all.
  • You may file an amended return for additional income if the income you stated on your tax return for the year was incorrect, or if you get additional tax documents such as a Form 1099 after the tax deadline.
  •  If you discover that the tax you paid is less than what you owe, you can file an amended return. You will avoid any IRS penalties as a result of this.

Filing an Amended Tax Return:

Amended Tax Return

Form 1040X is more difficult to file on your own since it requires you to list all and any changes made to the return, even changes made by the IRS to your original return after it has been processed. The original amount is reported in Column A, the net difference between Column A and Column C is reported in Column B, and the corrected amount is reported in Column C. Many questions and lines on Form 1040X require accurate information, as well as an explanation of the adjustments being made. For the average taxpayer, all of this is difficult and time-consuming, which is why we recommend contacting a Tax Preparer or a Miami Tax Accountant who can guide you through the process and do your taxes for you.

When mailing your amended return to the IRS, it is recommended that you include specific documents. To avoid IRS audits, attach documentation that clearly proves and justifies the adjustment you’re making on your return.

This form cannot be e-filed since it is mailed directly to an IRS agent for processing and acceptance of the return. This implies it could take up to 3 weeks for it to appear in the IRS system after you mail it. Processing the return can take up to 16 weeks after that. On the IRS website, you can check the progress of your amended tax return.

Contact SDG Accountant for assistance with amended returns, and our tax preparers and bookkeepers will file your return for you as soon as possible.

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How to Respond to IRS CP2000 Notice?

IRS CP2000 Notice

The IRS can send many notices to your house that were uncalled for, and they could be confusing and stressful to look at. These notices can go over your head because of the tax forms they are referring to and the unending due dates. Here is a complete guide of what one of these notices mean and how to handle IRS CP2000 notice.

What is a CP2000 Notice?

IRS CP2000 Notice

The IRS will send you a CP2000 notice if the income they have on file does not match the income you reported on your tax return. The IRS checks your tax return income against Forms W-2 and 1099 and will give you a notice if your income does not match. CP2000, or underreporting inquiry, is the name of the notice.

This notice primarily concerns taxes and penalties that you may owe as a result of missing or misleading income on your tax return. The IRS can also challenge deductions and credits on your return if they don’t match the income statements you filed under your Social Security number. It’s also possible that the IRS’s information to match your return is incorrect. Because CP2000 notices are computer-generated, there’s a good chance the notice was simply a robot error. There have been numerous instances where the IRS issued a CP2000 notice to a taxpayer and did not receive any funds due to an error.

How to Handle an IRS CP2000 Notice?

Follow the steps below to obtain the correct solution and avoid making any other mistakes:

IRS CP2000 Notice
  1. Assess the situation:
    Before you take any action, you must first assess your situation and begin confirming your unpaid taxes. You must check to see if the income you stated on your tax return is correct. Gather all the documents and statements you have access to under your Social Security Number first. These documents could include your W-2s, 1099s, and any other documentation you have. Compare these documents and forms to your tax return in detail, paying special attention to any lines where you might have made a mistake.
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  2. Contact the Internal Revenue Service (IRS):
    You can then send an IRS response based on the conclusions reached during the analysis process.

    If you agree with the notice and acknowledge that you made a mistake, you can send the CP2000 response form to the IRS along with your tax payment. If you are unable to pay the whole amount owed, you can request IRS Payment Plans and Agreements. If you disagree or just partially agree with the IRS CP2000 notice, you must send all relevant documents and forms to the IRS to prove that the IRS made a mistake and sent the incorrect notice. You can also mail a corrected return, along with all other forms and papers, with the help of a Miami Tax Accountant. Any penalties you may be facing can also be addressed in your response. If the IRS rejects your response, you have the right to appeal.
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  3. Closing the Case:
    Call the IRS to confirm that the case is closed after a few weeks of your response. To be sure, go over all your prior year’s statements and returns to be sure you haven’t made any other mistakes.

How to Get Expert Help?

Find a Miami tax accountant who can assist you in determining the cause of your CP2000 notice and communicating with the IRS on your behalf so that you don’t have to. For any of your IRS issues, seek assistance from a reputable tax accountant in Miami.

SDG Accountant is the best option for all your tax and accounting needs in Miami. We are a cross-border accounting and tax firm that offers a wide range of services. We are the best solution for everything from bookkeeping to expatriate tax!

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IRS Payment Plans and Agreements

The IRS offers a variety of payment plans to help taxpayers pay off their back taxes. These programs differ; you may receive a free installment plan or a pricier one. See below for more information on the various types of IRS payment plans and how you can benefit from them.

What is the IRS Payment Plans?

An IRS payment plan is an agreement between the IRS and the taxpayer to pay the taxes outstanding within a specific time frame. The IRS offers these plans to taxpayers who have owed taxes for up to ten years and provides them with a period and payment plan that is appropriate for their eligibility. IRS payment plans are classified into two types: short-term payment plans and long-term payment plans.

These payments are often made monthly for a fixed amount. If the arrangement is for more than 120 days, there is also a setup cost. The IRS offers several options for applying for these payment arrangements. Here is how to apply:

IRS Payment Plans
  1. Online Payment Agreement Application: The Online Payment Agreement application is the first and most convenient way to apply for an IRS Installment Agreement Plan. If the total combined amount of all your individual income tax, penalty, and interest owed is $50,000 or less, there is no setup cost for the online application. On the application, there are short-term payment options for 120 days or fewer, as well as monthly payment plans. This application is also available for businesses that owe less than $25,000 in total payroll taxes, penalties, and interest for current or previous tax years. When you apply for the Online Payment Agreement Plan, you will receive an immediate response from the IRS. It will immediately inform you whether your application was approved or denied by the IRS.
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  2. Application by Phone: You can also apply for payment plans over the phone. To apply over the phone, dial 1-800-829-1040. If you apply by phone, the IRS may request proof of your financial situation. Make sure you have all your documentation and financial information ready before calling.
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  3. Application by Mail: You can also apply for a payment plan by mailing the IRS the necessary documents. For the application, you must submit Form 9465 to the IRS. In addition, if you want to deduct your payment through payroll, Form 2159 is required. If you owe more than $50,000 in total, you must file Form 433F. All these forms must be mailed to the IRS address listed on your bill. The IRS allows applicants who apply by mail to reduce the accrual of fines and interest by making voluntary payments until their application is granted.
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  4. Application In-person:  The final option for applying for the Installment Agreement Plan is to visit an IRS office in person. You must bring all your documentation and have access to your financial information for the in-person application.

When it comes to the various plans that you might apply for, the short-term payment plan is a 180-day or shorter arrangement. This plan is free if you apply online, via phone, by mail, or in person. The highest amount you can owe the IRS under this plan is $100,000, which includes tax, penalties, and interest. Moving on to the long-term plan, the agreement can be for 120 days or longer. This package has various setup fees based on the payment type you pick. If you pay by automatic withdrawal, it costs $31 to apply online and $107 to apply by phone, mail, or in person. These costs change if you pay through a different method: applying online costs $149 while applying by phone, mail, or in-person costs $225. Keep in mind that if the applicant is considered low-income, these charges will be reduced.

How to Seek Professional Help?

IRS Payment Plans

Back taxes can be the most stressful and daunting scenario to deal with. It would take hours of research and a lot of effort to fill out all those paperwork in order for you to come up with a payment plan and choose the best possibilities. The best choice is to hire an experienced Miami Tax Accountant to complete all these forms and advise you on the best payment plan.

SDG Accountants is a tax and accounting firm located in downtown Miami, and we are the top tax accountant in Miami for all your tax and accounting needs. We help small businesses and individuals expand their businesses.

Contact us by phone at +1 (786) 706-5905 or by email at admin@sdgaccountant.com.

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