The answer is simple: File an amended tax return for the year.
Tax returns are not engraved in stone. You can amend a return any time within three years after the April 15 due date for the original return. If you obtained an extension to file, the three-year period runs from October 15; but, if you filed earlier than this, you must file with three years after the actual filing date. After the time limit expires you can’t file an amended return for that year.
You need not amend your return if you discover that you made a simple math error. These will be corrected by the IRS computers, and you’ll be notified of the change by mail. Also, you don’t need to be quick to file an amended return if you discover you forgot to attach a Form W-2, left off a tax schedule, or made a similar minor error. The IRS will probably process your return anyway, or will request you provide the omitted forms if they’re needed. However, if you made a mistake in your favor, failed to report income, or took deductions which you were not entitled to take, amending your return may avoid all or some fines, interest, and penalties if you’re later audited by the IRS.
If you've been chosen for an audit, it is better not to file an amended return after the audit starts. Chances are that the audit group will not get the amended return, and filing an amended return will only create confusion. It is better to discuss any proposed change in your return with the revenue agent conducting the audit.
Some people refrain from amending their returns, even if they discover the IRS owes them money, because they believe it increases the chances of an audit. However, IRS officials deny that filing an amended return increases your audit chances. Amending your return will likely not result in an audit unless there is a substantial change in your taxable income without a reasonable cause. Of course, you're more likely to be audited if you claim the IRS owes you money, rather than the other way around.
You shouldn't be afraid to amend your return if you have a legitimate reason to do so. Just make sure you do it properly. File the proper form, usually IRS Form 1040X. You must file a separate 1040X for each year you want to amend. Clearly explain on the form the reasons why you are correcting your tax return--for example:
You should have documentation to back up your claims.
Note that when you file an amended tax return you are supposed to correct all the errors that you discovered in your previously filed return. This includes errors not in your favor as well as those that reduce your tax liability.
You should receive your refund, if you’re entitled to one, in up to 16 weeks. Alternatively, you can apply all or part of your refund to your current year’s tax. However, your refund may be reduced by amounts you owe for past-due child support, debts you owe to another federal agency, or past-due state income tax obligations. You will be notified if this happens.
If the IRS denies your claim, it must explain why. You have the right to appeal such a denial.
]]>Using IRS2Go you can:
You can check on the status of your federal tax refund through IRS2Go. All you have to do is enter your Social Security number (which will be masked and encrypted for security purposes), select your filing status, and enter the amount of your refund for your tax return. You can start checking 24 hours after the IRS acknowledges that it has received your electronically filed return, or four weeks after you postal mailed your paper return. The IRS says that the refund tracking took is updated just once per day, so there is no point in checking on your refund more than once a day. You must have version 5.0 of the App to check on your refund. If you have a prior version, upgrade to 5.0.
The IRS offers free in-person tax help for lower-income and elderly taxpayers through its Volunteers Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. There are thousands of VITA sites located at community and neighborhood centers, libraries, schools, shopping malls, and other locations. You can use IRS2Go to find the VITA or TCE site that is nearest you. Simply enter your zip code and select a mileage range. The app will even provide you directions when you click on the directions button within the results.
You can also use IRS2Go to request a tax return transcript. This is a summary of the most important information on the return you’ve filed for a prior year. It could prove helpful if you can’t find a copy of a prior return. The transcript will be delivered by postal mail to the address you have on file with the IRS—it should take about five to ten days to receive. If you don’t want to wait for the mail, you can obtain a transcript electronically by using the “Order a Transcript” tool at irs.gov. Alternatively, you can call 800-908-9946. A recorded message will guide you through the transcript order process.
]]>If you fall within either classification, you are considered what's called a “resident alien” for tax purposes. Resident aliens must report all their income from all sources on their U.S. tax return and pay income tax on it at the same rates as U.S. citizens.
A green card holder is a foreign-born person who is a lawful permanent resident of the United States, even if living abroad. If you have a green card, you must pay U.S. taxes regardless of whether you spend most of your time outside of the country.
Nonimmigrant visa holders are foreign-born persons who are in the United States lawfully and temporarily, for example on an F-1 student visa or H-1B work visa. They must pay U.S. income taxes on their earnings if they satisfy the substantial presence test.
This test is complicated and has many exceptions. You meet it if you have been physically present in the United States on at least:
However, you don't need to count all the days you were present in the U.S. during the previous two years. You count 1/3 of the days you were present in the first year before the current year, and 1/6 of the days you were present in the second year before the current year.
Example: You were physically present in the United States on 122 days in each of three consecutive years. To determine if you meet the substantial presence test for the most recent year, count the full 122 days of presence that year, 41 days for the year prior to that (1/3 of 122), and then 20 days for the year prior to that (1/6 of 122). The total for the 3-year period is 183 days, so you are considered a resident under the substantial presence test for the most recent year.
You are treated as present in the United States on any day you are physically present in the country, at any time during the day. However, do not count:
If you exclude days of presence in the United States because you fall into a special category, you must file a fully completed Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition (PDF).
Even if you satisfy the substantial presence test, you can still avoid paying U.S. income taxes if you:
To win with this test, you must show the IRS that you maintain more significant contacts with a foreign country than with the United States.
If you're a resident alien, all the tax rules applicable to United States citizens, also apply to you. You can claim the same deductions allowed to U.S. citizens if you were a resident alien for the entire tax year. If you do not itemize your deductions (which only makes sense for high-income persons), you can claim the standard deduction. Resident aliens also generally claim tax credits and report tax payments, including withholding, using the same rules that apply to U.S. citizens.
You can claim personal exemptions for dependents who are citizens or nationals of the United States or residents of the United States, Canada, or Mexico for some part of the calendar year. You can also claim an exemption for your spouse if you file a Married Filing Separate return if your spouse had no gross income for U.S. tax. You can claim this exemption even if your spouse has not been a resident alien for a full tax year or is a foreign national who has not come to the United States.
Obviously, it’s unfair for a resident alien to pay U.S. income tax on income derived from a foreign country and also to have to pay tax in the foreign country on the same income. To avoid double taxation, nonresident aliens may claim a foreign tax credit for the lesser of the taxes they paid in their home country, or the amount of their U.S. tax liability for income from foreign sources.
The due date for filing your tax return and paying any tax due is April 15 of the year following the year for which you are filing a return. You are allowed an automatic extension to June 15 to file if your main place of business and the home you live in are outside the United States and Puerto Rico on April 15. You can also get an automatic extension of time to file until October 15 by filing Form 4868 on or before April 15 (June 15 if you qualify for the June 15 extension).
]]>If you fail to file a tax return or contact the IRS, you are subject to the following:
You should file your return as soon as possible and pay all the tax that is due, if any. You'll save money by doing so because the IRS late penalty and interest charges are calculated from the date your return was due (April 15), so the earlier you file, the less you pay.
If you can't afford to pay all the tax that is due, you should still file and pay as much as you can. By paying as much as possible now, the amount of interest and penalties you'll owe will be lessened.
You can enter into an installment agreement with the IRS. This is an agreement between you and the IRS to pay the amount due in monthly installment payments. You must first file all required returns and be current with estimated tax payments. If you owe $25,000 or less in combined tax, penalties and interest, you can request an installment agreement using the Online Payment Agreement application at www.irs.gov.
]]>Maybe -- amnesty periods, which let nonfilers come forward without being criminally prosecuted or civilly fined, are discussed in Congress most years.
But the IRS has always opposed tax amnesty legislation. The IRS's reasoning is that, after the amnesty period expires, significant numbers of people won't file, expecting the IRS to have another amnesty program. Based on the success of the states that are trying amnesty programs, however, many tax professionals think the IRS is wrong.
It can be a good idea to file old returns, at least from the past six years. If you voluntarily file your old tax returns before the IRS notifies you that you are under criminal investigation, the IRS will usually not prosecute you criminally for your original failure to file those tax returns. For more information, see Stand Up to the IRS, by attorney Frederick W. Daily. It includes a chapter on what to do if you haven't filed, as well as a chapter on tax fraud and crimes.
At least six years, and possibly forever. While the government has only six years from the date the nonfiled return was due to criminally charge you with failing to file a tax return, there is no time limit for collecting taxes and assessing financial penalties for not filing. It is not until you actually do file a return that the audit time limit -- three years -- and collection time limit -- ten years -- starts to run.
As a practical matter, however, if you haven't heard from the IRS in six years, you don't need to worry too much about taxes owed on a nonfiled return. The IRS usually doesn't go after nonfilers after six years -- unless the IRS begins its investigation before the six years elapsed and you owe a large amount of taxes. After six years, the IRS frequently purges its computer files.