I did not owe any tax in 2008, but made two pretty large errors on my return. I entered a capital gain incorrectly and I misclassified a tax exempt bond. The two are roughly the same size in opposite directions, and if I fixed both I would still owe no taxes. Presumably if audited they would correct both and there would be no change. So, do I just forget about it, or am I obligated to amend the return?
As a practical matter, is there any chance of an audit at this point?
1) If the tax change is zero or small (less than $50), it's a toss-up. 2) The audit pool for 2008 is about 60% complete. There's still a chance until about September. After that point, the IRS doesn't like to open returns that have about 6 months left on the period of limitations, so only late-filed (or filed with extension) 2008 returns will be coming through then.
If it's on your mind, I'd just get going on the 1040X. It would be nice to not have this as a question (keeping you up) for the next 11 months.
I did not owe any tax in 2008, but made two pretty large errors on my return.
I'm no expert but if you made 2 large errors wouldn't you think they'd catch it? sooner or later.
Why risk an audit when you can file an amended return. If you owe nothing then you'll get something back right?.
Who knows what they'll dig up at an audit or what it will lead to or how much time and money you'll have to pay a proffesional to defend you if need be. I'd ammend the return and be done with it. No brainer. I'm just an ordinary shmoe, have no accounting or tax experience other than what I learn from the experts on here but the way you present the question you sorta answered yourself. No brainer..1040X.
A dangerous presumption. Do as others have suggested and file an amended return.
Isn't the presumption that the IRS would accept both corrections on amended return an equally dangerous presumption?
It depends. Does every number that was reported to you on a 1099 or other document filed with the IRS show up on your return? If so, it isn't likely that it will be questioned. However, if you didn't report the gross proceeds from the capital transaction correctly, and that amount was reported to IRS, you'd probably better fix it.
Any auditor who looks at your return and can see that you reported tax exempt interest as taxable isn't going to touch your return with a 10- foot pole unless he can also see that the capital gain is understated
-- which won't be obvious if the gross proceeds were reported properly.
You have no legal obligation to file an amended return if no additional tax would be due.
Katie in San Diego
Filing an amended return is no guarantee that you won't be audited. In some circumstances it can increase the likelihood of an audit.
Katie in San Diego
As the OP described it, these were points of fact, not something one would consider a judgment call. If he has the documents to prove the mistake and show the correct numbers, there's not really a question of 'accepting.'
yes, that really was my point rebutting Bill Brown's comment.
You didn't rebut my comment nor did you respond usefully to Joe Taxpayer's post.
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