PODCAST: Navigating Tax Amendments: Why They Happen and How to Avoid Them

Podcast Media

Written by Jeff Dvorachek

February 29, 2024

Welcome to the Tax Insights Podcast, where we break down complex tax topics into bite-sized how-tos. In this episode of Tax Insights Podcast, Jeff Dvorachek explores the ins and outs of tax amendments. From mergers to forgotten details, don’t miss out on valuable insights to ensure your taxes are in top shape!

Are you aware of the potential reasons why you might need to amend your taxes? From overlooked investment statements to complex family dynamics impacting dependents, Jeff explores various scenarios that could prompt tax return revisions. Let’s dive in!


Host: Today on the program, let’s talk about maybe some of the reasons why you might have to amend your taxes.

Jeff: That’s right, because as we are preparing returns right now, there could be information that we are not even aware of that affects their return for this year, and later on, when the IRS starts matching up their data, if it doesn’t match, the IRS is going to send out a letter, and that letter might result in you having to amend your return.

Host: So what would be some of the reasons why the IRS would send you something that you don’t already have that you would have to amend? Like what would be some examples?

Jeff: I think it’s mostly just things that you probably forgot. Okay. So one of the things is that especially this year, there’s been quite a few investment companies that have merged with other investment companies. You know, TD Ameritrade actually merged with Schwab and E-Trade merged with Morgan Stanley. So if you were used to getting TD Ameritrade or E-Trade statements and you filed your return assuming that that’s all you needed, you might have missed an additional Schwab or Morgan Stanley statement that you should have reported. Those only reported for part of the year, and then the company that merged with them reported that income for the rest of the year. So you really need to file that same amount of income.

Host: Sure. So what does it really mean then to amend the taxes I mean are there penalties that you have to that you have paid because you have to amend it or like not necessarily.

Jeff: Yeah. Mostly it’s interest but if your income is understated by a substantial amount there could be interest and penalties. You know there’s other things to Terry like you know we talked a while in the past about these qualified charitable distributions where people over seven and a half can put money right from their IRA into charities. Well that’s not reported anywhere on that 1099. It’s pretty much the taxpayer has to tell us that they did this or we’re never going to know and that could result in actually them amending a return and getting a refund which sometimes is a good thing.

Host: Absolutely. And I think you know that’s where having these upfront conversations with your advisor such as you guys is critical and key because without all the information you can’t fully prepare shall we say their taxes.

Jeff: And that’s exactly right Terry. And it even goes further than that. So not only the taxpayers talking to us but taxpayers talking to their kids because the other thing that we see for having to amend returns is let’s say that your son or daughter you know they work at you know a restaurant or they work somewhere not enough to really file a return but enough to file to get that withholding back. Okay. So the child just goes ahead and they file their return to get their withholding back but they claim themselves as a dependent by checking that box. Well now the parents want to claim them as a dependent and the return gets rejected because two people can’t claim the same person. So that’s going to result in an amendment return for the child a paper return for the parent and a big delay in getting that refund back.

Host: I was going to say you know and that’s the biggest thing right I mean like the delays in all of this especially if you’re getting a refund you don’t want to wait that long before you get the refund.

Jeff: Really that’s correct because with the way you filing and direct deposits of refunds I mean refunds are coming pretty quickly now whether it’s for the IRS or for the states but once you slow that process down I mean it could be six weeks eight weeks even we’ve even seen nine months before people got in the rear and back. So you really want to make sure that you’re kind of covering all your bases when you get your tax term prepared.

Host: Jeff a lot of great information here on the program how do our listeners connect with the team over at Hawkins Ash.

Jeff: I would go right to our website which is Hawkins Ash.CPA we have that great section it’s the CPA-HQ section but also Terry stuff like this all of our social media sites.

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Jeff Dvorachek
As a partner, I have thorough experience providing tax services to individuals, privately held businesses, nonprofit entities and estates and trusts. I also provide compilation and review services.

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