Today TaxMama hears from Tom in California, with a problem. “I overstated my income. How do I correct this?”
This is an interesting problem.
Naturally, the way to correct any error on a personal income tax return is to file an amended return – Form 1040X. https://www.irs.gov/pub/irs-pdf/f1040x.pdf
When you file the amended return, it does get reviewed by a live person, not a computer – unlike the original filing of that tax return.
So, why is this interesting? It’s hard to prove you earned less than you originally reported.
What made you realize that you overstated your income?
Was it a 1099 you received that showed less income than you expected? That’s meaningless. You don’t do bookkeeping by way of 1099s other people send you. You’re meant to keep real books.
Did you use the total deposits shown on your bank statement? Now, when you looked something over, you realized that not all the deposits were income? OK, fine. But you’ll have to prove that some of those deposits were something else – like loans or transfers from other accounts…or whatever.
So, sure, go ahead and file an amended return for the year. But be very sure you can PROVE your case – otherwise, expect your claim to be rejected. And perhaps it might even generate an audit. That has been know to happen.
Be sure to read the instructions to the Form 1040X and good luck!
And remember, you can find answers to all kinds of questions about fixing errors on your tax return and other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
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- IRS Form 1040X :: Amended U.S. Individual Income Tax Return
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