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 Apply for Currently Not Collectible (CNC) Status from the IRS?

Currently Not Collectible (CNC)

Every American is required by the IRS to file their taxes each year, with the assumption that they will pay their tax obligation immediately after filing. The majority of taxpayers file and pay their taxes on time, however, some do not. According to records, approximately 5 million people fail to pay their taxes, and approximately 3 million set up payment plans and agreements, but what about the remaining taxpayers? They apply to the IRS for the Currently Not Collectible Status (CNC) in order to avoid the payments.

What is the Currently Not Collectible (CNC) Status?

The IRS determines that a taxpayer does not have the resources or ability to pay their taxes using the Currently Not Collectible (CNC) Status after a thorough inquiry. This status protects taxpayers from IRS penalties and allows them to avoid paying any taxes. This status allows you to talk with the IRS about your situation so that they may check all of your financial information and, if necessary, put you on a payment plan or grant you CNC status.

Before moving on to the next phase, you must have proof that you are unable to pay those taxes. The IRS requires Form 433-F, also known as the Collection Information Statement, to certify your CNC eligibility. This form can be filed to the IRS either by handing it over to an IRS Revenue Officer or by using the IRS Automated Collection System Unit. There’s a better likelihood the IRS will approve the taxpayer’s request for CNC status if they don’t have any assets that the IRS may seize instead of the money. If the IRS approves your inability, you may be eligible for CNC status.

What Happens after I am stated as Currently Not Collectible?

After the IRS has granted you CNC status, the IRS will cease all tax collection activities, including levy and wage garnishment, as well as any other types of activity that involve collecting money from you. You will still receive an annual statement from the IRS detailing the amount of unpaid tax, but it will not be considered a bill, and you will not be required to pay any of it.

If the CNC status is maintained for more than ten years, all taxpayer debts will expire and become non-payable. During those ten years, however, all of the limitations of the 10-year statute remain in effect.

Keep in mind that before approving your request for an IRS payment plan, the IRS will try all possibilities. They look into all of your living expenses and monthly payments to see if there is any way out. They can also set payment limits, for example, if you have a $1,300 monthly auto payment, the IRS can decrease it to $500 so you can pay your taxes.

How to Achieve the IRS Currently Not Collectible (CNC) Status?

Currently Not Collectible

Getting in touch with a Miami Tax Accountant and discussing your concerns with a tax professional is the simplest way to obtain IRS CNC status. Make sure you get an experienced tax professional who has dealt with similar scenarios in the past. You can also submit a direct application using Form 433-F. However, you should first speak with a tax specialist who can help you locate the best scheme for you.

Information Required to Request IRS CNC Status:

To confirm your eligibility for CNC status, the IRS requires a collection of documentation. The following are the documentation you’ll need to show to the IRS:

  • Copies of the most recent pay stubs for each job for the previous month
  • Copies of the most current statements showing all monthly income received
  • Copies of all owned properties’ most recent real estate tax bills
  • All utility bills (copies)
  • Copies of the lease and mortgage bills
  • Copies of all monthly expenses, evidence of assets, and recent credit card payments

Next Steps:

If you’re in a bad financial situation, here are all of your options:

  1. Consider CNC status
  2. If you can resolve the debt in any way, consider an offer in compromise (settlement with the IRS)
  3. If you’re still stumped, seek advice from a tax professional.

It is a tax professional’s job to be extremely aware of all IRS notices and penalties. To learn more about your possibilities, speak with a Tax Preparer in Miami. SDG Accountants are tax specialists with a lot of experience dealing with IRS notices and fines.

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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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