Tuesday, October 18, 2011


After writing and publishing Monday’s post on amended returns I was reminded of a story from the early days of my career.

I have been preparing 1040s for 40 tax seasons now.  And I have been taking some form of CPE (continuing professional education) since almost the beginning – not because of any requirement or any college credit it provided, but because I wanted to learn.

Back in the 1970s, before there was a National Association of Tax Professionals or any other such organization, I took several evening tax courses at the New York University School of Continuing Education, all taught by practicing tax professionals.

In one course on 1040 issues, I forget the name and scope, the “professor” told the class that, because of some internal procedures at the IRS, an amended return filed very close to the statutory 3-year deadline would almost never be questioned by the Service.

This professor said that he would file his 1040 each year with minimal employee business expenses and 3 years later, weeks before the April 15th deadline, he would amended the return to claim the rest of his ebe (I assumed at the time that he meant he claimed the legitimate expenses that he did not include on the original filing – and not that he claimed excessive expenses because he knew he would not be questioned).

I do not know if the same internal procedures still exist within the IRS, but I certainly would not recommend doing what the “professor” did.  You should claim all of the deductions to which you are legally entitled on the original filing of your return.  And if you discover an error soon after filing your original return you should certainly not wait three years to file an amended return to claim an additional refund.  File the 1040X ASAP, waiting only for the original refund to be received or the original return to be processed.

What I would do, just in case, is, if you discovered the error 2+ years after filing the original return, wait until a month before the April 15th (or whatever) statutory deadline to submit the Form 1040X.

As a point of information, the longer you wait to file an amended return to get an additional refund the more interest you will be paid by the IRS.  And the IRS pays a higher interest than any bank.

1 comment:

Peter Reilly said...

One point that people need to watch out for if they used those GD extensions. When you file on extension the filing cuts off the statute of limitations. So a 2008 return extended to 10/15/2009 that was filed on 8/1/2009 has to be amended by 8/1/2009.