Last Three Years Tax Returns Examination & Assessment (for Corrections and Additional Refunds as per the Eligibility) for Tax Years 2014, 2015 & 2016
It is always advisable to go for the tax returns evaluation of last three years (tax year 2014, 2015 & 2016).IRS always encourage tax payers to claim their missed Exemptions, Deductions or Credits. IRS has automated its audit system with the help of a software’s it can anytime check your 1-7 years tax returns as their regular checks so, before IRS come up with any audit, notice, enquiries it is a good decision to evaluate and correct your tax returns. Form 1040X will be your new tax return changing your original return to include new information.
Below are the tax benefits which each eligible tax payers can claim and cash in the money.
Premium tax credit (PTC)
Heath coverage tax credit (HCTC) for 2014
Medical expenses deduction on Schedule A
Self-employed health insurance deduction
Net premium tax credit
Excess advance premium tax credit repayment
Alternative minimum tax
• net operating loss (NOL)
• credits and other losses
Change in filing status
Claiming a refund for a deceased taxpayer
Household employment taxes
Injured spouse claim
Qualified reservist distributions
Reimbursement received for hurricane-related casualty loss
Waiver of penalties and interest
Casualty loss from a federally declared disaster
Relief for homeowners with corrosive drywall.
Resident and nonresident aliens.
Filing right tax returns.
Filing correct filing status
Claiming additional dependents
Removing dependents mistakenly claimed
Interest and Penalties
IRS will charge the interest on taxes not paid by due date though you had an extension time to file. The IRS will also charge you interest on penalties for failure to file, negligence, fraud, substantial valuation misstatements, substantial understatements of tax, and reportable transaction understatements. Interest is charged on the penalty from the due date of the tax return (including extensions).
Penalty for Erroneous Claim for Refund or Credit. If you have claimed the refunds or credits more than a permissible amount, you will have to pay a penalty of 20% of disallowed amount, unless you had allowable reason to claim.
Penalty for Late Payment of Taxes.If you don’t pay the additional tax due on Form 1040X within 21 days from the date of notice and demand for payment (10 business days from that date if the amount of tax is $100,000 or more), the penalty is usually ½ of 1% of the unpaid amount for each month or part of a month tax isn’t paid. The penalty can be as much as 25% of the unpaid amount and applies to any unpaid tax on the return. This penalty is in addition to interest charges on late payments. You won’t have to pay the penalty if you can show a reasonable cause for not paying your taxes on time.
Penalty for Frivolous Tax Return.. In addition to any other penalties, the law imposes a penalty of $5,000 for filing a frivolous return. A frivolous return is one that doesn’t contain information needed to figure the correct tax or shows a substantially incorrect tax because you take a frivolous position or desire to delay or interfere with the tax laws.
When to File Form 1040X
You must file Form 1040X within 3 years (including extensions) after the date you filed your original tax return or within 2 years after the date you paid the tax, whichever is later. The time limit for filing Form 1040X can be suspended for certain people who are physically or mentally unable to manage their financial affairs.