Often a large tax bill can be the result of a poorly done tax return. While many of those in the industry do an adequate job and are detailed with their work, unfamiliarity with all the nuances of tax returns for expats can leave the taxpayer exposed to a higher tax instead of a lower tax. Therefore, a thorough review of your tax returns can result in a determination of whether an amended return is necessary.
Once a tax return has been filed, changes can only be made by filing an amended tax return using Form 1040X. An amendment is used to report any mistakes, errors or omissions made on the original Form 1040, Form 1040A or Form 1040EZ.
An amended return should be used when the taxpayer
- Has additional income to report
- Has additional deductions or credits to claim
- Has claimed deductions or credits they were not eligible to receive
- Wants to change the filing status
- Wants to change the number of dependents
For expats, a review of your tax circumstances should include the recognition of any potential tax benefits that were overlooked or inadequately addressed, such as the foreign earned income exclusion amount, exclusion qualification period, or potential pitfalls and areas of concern such as the requirement to amend the Schedule B in conjunction with reporting an initial FBAR or amended FBAR that could expose the taxpayer to significant penalties if not optimally addressed and appropriately prepared and filed.
Generally a claim for a credit or refund must be filed within 3 years after the date the return was originally filed or within 2 years after the date the tax was paid, whichever is later. If a claim is not filed within this period, a taxpayer may not be entitled to a credit or refund.
A lot of taxpayers are reluctant to amend their tax returns, especially after they hear that IRS officers will possibly audit them later down the road. Though this is always a possibility we cannot stress enough the advantages of filing an amendment on a tax return.
If you are ever wary about filing an amendment, you can seek professional advice and a complimentary review from me. I will do a thorough review of your return to ensure that the return is accurate, complete and that nothing was overlooked.