Amending Tax Returns

/in , , /by

Whether you need to amend your previously-filed tax return depends on your particular situation. In some situations, such as simple math errors, the IRS will correct the return for you. In other situations, however, you should file an amended tax return. The most common situations occur when you need to change your: filing status, dependents, income, deductions and credits.

If you are eligible to claim the first-time homebuyer credit for a qualified 2010 home purchase, you may wish to elect to amend your 2009 return in order to claim the credit this year without waiting for the next year to file the 2010 tax return.

You should use Form 1040X, Amended U.S. Individual Income Tax Return, to correct a previously filed Form 1040, 1040A or 1040EZ. Be sure to check the box for the year of the return you are amending on the Form 1040X, Line B, or write in the year if you are amending a return filed in year prior to those listed on the form. If you are amending more than one tax return, you will need to prepare a 1040X for each return If the changes involve other schedules or forms, attach them to the Form 1040X.

If you are filing to claim an additional refund, you should wait until you have received your original refund before filing Form 1040X. However, if you owe additional tax for 2009, the opposite is true – you should file Form 1040X and pay the tax as soon as possible to limit interest and penalty charges. Interest is charged on any tax not paid by the due date of the original return, without regard to extensions.

Whether you are able to claim a refund will depend on the applicable statute of limitations, but generally, you have three years from the date you filed your original return or two years from the date you paid the tax, whichever is later.

Sherayzen Law Office can help you determine whether you need to amend your tax return and help you prepare Form 1040X with all attachments.

Call Sherayzen Law Office to discuss your tax situation with a tax attorney!

IRS Statute of Limitations: Taxpayer Audit

/1 Comment/in , , /by

The tax statute of limitations limits the time during which an action can be brought by the IRS for an audit. The general rule is that IRS has three years from the filing date to audit a tax return. 26 U.S.C. §6501(a) and Treas. Reg. §301.6501(a)-1(a). Similarly, under Treas. Reg. 301.6501(a)-1(b) no proceeding in court by the IRS without assessment for the collection of any tax can begin after the expiration of three years.

However, if the taxpayer fails to report on his tax return an amount in excess of 25% of the gross income (as stated on the filed tax return), then the statute of limitations is increased to six years. 26 U.S.C. §6501(e).

If the tax return was prepared by the IRS under the authority of section 26 U.S.C. §6020(b) the statute of limitations simply does not apply. See 26 U.S.C. §6501(b)(3). Likewise, the statute of limitations does not apply in the case of a false tax return or fraudulent tax return filed with the IRS with intent to evade any tax. See 26 U.S.C. §6501(c)(1).

This essay states only the general rules. The statute spells out numerous exceptions to these general rules. Therefore, even though most of the situations are resolved by the general rule, it is best to consult your tax attorney to see if your situation fits into one of the exceptions.

Call Sherayzen Law Office to discuss your tax situation with a tax attorney!

Effect of Legal Separation and Divorce on Your Ability to Claim “Single” Tax Status

/in , , , /by

According to the IRS, in order to be able to claim “single” tax status, you must be “unmarried or legally separated from your spouse under a divorce or separate maintenance decree” on the last day of your tax year, and you do “not qualify for another filing status.” (See IRS Publication 501).

Determining your marital status can be a complex legal matter with numerous exceptions, and exceptions to exceptions. Only a tax professional who reviews the facts of your case may be in position to advise you on your marital status. Here, I will only attempt to sketch the broadest concepts to give you some awareness of the issues.

IRS may consider your marital status as “unmarried” if, on the last day of the relevant tax year, “you were unmarried or legally separated from your spouse under a divorce or separate maintenance decree.” Id. Usually, the state law will determine whether you were legally separated from your spouse on the last day of the relevant tax year. If you were divorced under a final decree by the last day of the year, the IRS will consider you unmarried for the entire year. However, if the divorce was motivated by the desire to file your tax return as unmarried persons, and you and your spouse remarry the next year, the IRS will disregard the divorce for tax purposes and demand that you and your spouse file your tax return(s) as married persons.

If your marriage is annulled (by a court decree which holds that no valid marriage ever existed), the IRS will consider you as “unmarried,” and you must amend your tax returns for all years (within the Statute of Limitations – usually the past three tax years) affected by the annulment.

Keep in mind that, if you are able to claim “single” status, you may also be eligible for a more advantageous tax filing status, such as “head of household” or “qualifying widow(er) with a dependent child.”

Call Sherayzen Law Office to discuss your tax filing status with an attorney!

Importance of Determining Your Tax Filing Status

/in , , , , , /by

Figuring out your filing status is the first major step in filing your tax return. Your tax filing status not only will allow you to determine the correct tax (from the Tax Computation Worksheet or appropriate column in the Tax Table), but also it is crucial to understanding your eligibility for and the exact amount of deductions, exemptions, tax credits. For example, in some situations, if your taxable income is close to $160,000, the choice between filing as “single” and filing as “married filing separately” may influence whether you need to pay the alternative minimum tax (“AMT”); it is more likely that filing as “single” will help you avoid AMT, while “married filing separately” status may have the opposite effect. Sometimes, the latter tax filing status may also make you ineligible for certain tax credits even at a much lower income bracket – a situation that may be avoided if you are filing joint tax return with your spouse.

There are five possible tax statuses: 1) single; 2) married filing jointly; 3) married filing separately; 4) head of household, and 5) qualifying widow(er) with dependent child. The benefits and drawbacks of each status differ greatly depending on a tax situation. In some cases, you may be eligible for more than one status (for example, single and head of household); in other cases, your eligibility may be greatly influenced by the choices you make.

In order to draw out the benefits and avoid costly mistakes, careful tax planning is necessary. The Internal Revenue Code (“IRC”) is so complex that it requires a tax professional to fully understand its provisions. Tax attorneys are professionals who usually are in a much better position to legitimately utilize possibilities offered by the IRC.

Sherayzen Law Office is a law firm that offers individual and business tax services. We can help you understand your current tax position, file the tax returns for you, and carefully plan your tax strategies for the future. CALL NOW to start resolving your tax issues!

Tax-Exempt Organizations Must File Form 990 by May 17, 2010

/2 Comments/in , , , /by

Under the Pension Protection Act of 2006, most tax-exempt organizations, with the exception of churches and church-related organizations, must file Form 990 with the IRS effective the beginning of year 2007. Any tax-exempt organization that fails to file the relevant version of the form for three consecutive years automatically loses its federal tax-exempt status.

All Form 990-series returns are due on the 15th day of the fifth month after an organization’s fiscal year ends. Many organizations use the calendar year as their fiscal year, which makes May 15 the deadline for those tax-exempt organizations. This year, however, since May 15 falls on a Saturday, the deadline is actually on May 17, 2010. Absent a request for extension, there is no grace period from filing by the original due date.

Small tax-exempt organizations with annual receipts of $25,000 or less can file an electronic notice Form 990-N. Other tax-exempt organizations with annual receipts above $25,000 must file a Form 990 or 990-EZ, depending on their annual receipts. Private foundations must file Form 990-PF.