Q:

Hi Kerry,
Here's another question for you... I filed my taxes electronically this year and everything was processed through when I discovered I failed to include some income on my Schedule C-SE. I filled out the amended return forms and now know I owe a little more tax, how do I go about paying them? How do I show that I've already paid some portion of them and do I include a check or will they know where to direct debit?

Also, do I include the original 1040 or just mail the 1040X form and the changed schedules?

Thanks!

A:

As I said previously, you really should be working with a professional tax practitioner to ensure that your tax returns are prepared properly.

To correct any material mistakes on previously filed Federal tax returns, you need to prepare Form 1040X and send it along with copies of all forms and schedules that have changed since the previously filed return.  The 1040X has spots to show what you have already paid in for  the year, as well as any overpayment you may have already received as a refund or rolled over to 2007.

If you live in a taxable state, you will need to file a similar X form with your state tax agency.

IRS is currently charging interest at the annual rate of 8.0%, compounded daily; so you should include a check for the taxes and your best calculation of the interest from April 17, 2007 until the check is received by IRS.  Since that start date hasn't arrived yet, if you get your 1040X in by that date, there should be zero interest.

Again, a tax pro can help make sure that this is the final amended return you have to send in for 2006, as well as help you find other deductions that you overlooked that could very easily turn the tax due situation into a refund. 

Good luck.

Kerry Kerstetter

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 4/15/2007 12:39:00 PM Send this post: