Many taxpayers miss out on refund money from these common overlooked deductions and credits. What’s worse is many taxpayers get letters from the IRS assessing taxes that can often be legitimately mitigated. The good news is, you can often amend your tax return to claim the lost money.
Amended Tax Returns
if you made a mistake or an omission on your tax return, you can amend it quite simply using IRS form 1040X. Generally you can go back as far as three years to amend your return, though some benefits expire sooner than that. Here are the typical tax credits and deductions that taxpayers do not claim correctly.
#1 Amended Tax Return Reason – Education Credits
As a tax practitioner that sees a lot of volume, I see this reason perhaps more than any other. If you or a dependent had qualified tuition expenses, there might be free money waiting for you in the form of education credits.
When it comes to education credits, the tax code is a bit complicated. It’s very easy to miss the best credits or not claim them correctly. If you think that you would like to hire us for help in this matter, please feel free to contact our local tax preparation office here and we will see if you have a legitimate claim to education credits that you did not yet take. We can provide amended return services online.
#2 Amended Tax Return Reason – Rental Unit Depreciation
Many self-preparers miss this large tax deduction. Less experienced tax preparers do not know about depreciation as well.
If you have rental property, you “have to” depreciate the cost of the structure and any major repairs each year.
When you go to sell the unit, you will be taxed on its sale as if you took the allowable depreciation, even if you did not take it.
This can make for a nasty letter from the IRS with a huge tax due bill!
The worst thing is that, if you missed this extremely important deduction, you can only go back 3 years to claim it.
This is a missed tax deduction that could literally cost you thousands of dollars, not to mention one that can make you refunds bigger each year. If you have a rental unit and you are not taking depreciation, please contact us right away.
#3 Amended Tax Return Reason – Basis on Stock Sales
If you sold stock or other securities, your broker will report the sale to the IRS. They report includes your cost of the items if they were bought in the last couple of years, but this information is left out on securities that you bought years ago.
If proceeds from a sale were more than your cost basis in the security, you will have to pay capital gains taxes on the net profit.
What many taxpayers get caught on here is that the IRS will see the sale of the security, but (sometimes) not know how much you paid for it. If you did not report this transaction on your tax return, the IRS will assume that you had no cost basis, and adjust your account to show that the entire amount of the sale was a capital gain.
Needless to say, if you sold a lot of stock, and you didn’t report the cost basis, you can end up with a massive tax bill that you really don’t owe.
The answer is to simply amend your tax return to reflect the basis. once submitted to the IRS, they will review your case and re-adjust your account. Thank goodness.
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