Monday, October 17, 2011


I inadvertently deleted a comment that had been posted to IT AIN’T NECESSARILY SO that, while it had absolutely nothing to do with my post, posed a good question.  I apologize for the deletion – and will herein respond to the question.  

The reader asked –

If you have to amend several years of taxes, will this lead to an audit?

In almost 40 years of preparing 1040s I have never seen a Form 1040X (an amended return) audited - or even questioned.

I think one of the reasons is that, in addition to providing a detailed explanation of the changes made on the 1040X, often actual documentation of the changes is attached to the amended return (which I recommend).  So any potential questions are already answered.

I think it is an “urban tax myth” that filing an amended return will substantially increase one’s chance of an audit.

What I do recommend to clients who are amending several years of taxes is that they mail the oldest 1040X first (i.e. if amending 2008, 2009, and 2010 mail the 2008 Form 1040X first).  When the refund for that return is received mail out the next (i.e. 2009) Form 1040X.  And when that refund is received mail out the next (i.e. 2010).  If you are not requesting a refund, allow at least 8 weeks between the mailing of each return. 

Generally you have three (3) years from the due date of the return being amended to file a Form 1040X – although there are situations when you can, and would want to, file amendments for earlier returns.  For example, you have up to seven (7) years to amend a return to claim a loss on worthless stock.

If you find an error on a previous return, and that error affects subsequent returns or the error was repeated on subsequent returns, you should submit amended returns.  Do not be afraid that you will be automatically audited.  If your amendment is legitimate, and you are one of the truly rare “amenders” who are actually questioned, you should have nothing to worry about if you have proper documentation for the change(s). 

As I have said in the past, while an audit is not something you would want, if your return is properly and correctly prepared, and you have documentation for your income, deductions and credits, there is no cause for fear and concern.  In such a case the audit is just an inconvenience.  You should not make tax decisions based solely on the possibility of being audited.    


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