Nine Tips to Keep in Mind When Amending Your Tax Return

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DARRIN T. MISH:   Good morning and welcome to the IRS Solution Attorney Show. I am the IRS Solution attorney, Darrin T Mish.

DARRIN T. MISH:   Good morning and welcome to the IRS Solution Attorney Show. I am the IRS Solution attorney, Darrin T Mish.

KATRINA MADEWELL:   And I’m your cohost Katrina Madewell. Welcome to the show this morning.

DARRIN T. MISH:   How you doing today?

KATRINA MADEWELL:   Great, any better for you now that we’re past tax crunch day or is it busier for you?

DARRIN T. MISH:   You know, we stay busy all year long because my practices focuses primarily on the handling of tax problems, but you know the week or two or month before tax deadline time,  it is always crazy at the office. It’s funny, there’s some psychological trigger that just freaks out even people who haven’t filed tax returns in 5, 10, 20 years. This last week, they get really freaked out, and they think about a lot, which I’m happy for because those thoughts propel them to their ultimate solution, their goal of not having tax problems.

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KATRINA MADEWELL:   One of the only people that don’t encourage repeat business.

DARRIN T. MISH:   I do have a bit of repeat business. But I have to admit, it is a bit disappointing. If I take in a client that is 8 years ago or something, I helped them save 100,000 dollars and helped get their life back on track and they come back, and they did the same thing again. It makes me feel a little bit bad because it feels like I powered them to or script their lives again, and that’s not what I’m about at all. I’m really about just trying to help people solve the biggest problem they have in their life, and I’m really passionate about that. Some people just need a couple shots at it, you know, before they understand what they need to do correctly so they don’t ruin their financial life.

KATRINA MADEWELL:   Well, there’s that old saying that you can bring the horse to the water, but you can’t make them drink so I mean you can fix it the first time, but that doesn’t mean that they will learn and you know, I think we’ve all been there, we’ve all made the mistake a couple times, before you get it.

DARRIN T. MISH:   Right, yeah I’m not going to say I’ve never made the same mistake twice, because I certainly have and it’s an ongoing struggle with all of us humans I think is that sometimes there are slower learners among us.

KATRINA MADEWELL:   Some more than others, but money is a very emotional thing for a lot of people.

DARRIN T. MISH:   Yeah, because I think money ultimately represents security, right, safety, comfort, all those things and then when you have a breadwinner, you know the breadwinner for a family, and they start to have money problems, well geez that means, that makes it really hard for them. I know in my mind, sometimes when you’re having financial problems, the things that always go in your mind are always the ultimate worst case scenarios. My kids and I will be living under a bridge, or that kind of thing. That stuff doesn’t happen typically.

KATRINA MADEWELL:   I think their problem is a lot of times, when income changes, the first thing people should change is lifestyle and they don’t…

DARRIN T. MISH:   You think they should reconsider how they’re spending their money and maybe they should go and cut expenses. But a lot of the time, we delude ourselves I think into thinking that things are going to get better, and we can keep paying for the monthly car wash membership and all these kind of extra things you don’t need, and it’s surprising. You know, I look at a lot of people’s bank statements because it’s a part of the process. It’s a deal you can make with the IRS.

KATRINA MADEWELL:   As do we, for different reasons.

DARRIN T. MISH:   Yeah, so we look at bank statements a lot and never ceases to amaze me on some of the things people spend money on day after day after day. One of those things… do you remember when you couldn’t spend 7 bucks on a cup of coffee? I remember that time. You see that a lot.

KATRINA MADEWELL:   I remember when 2 dollars was a lot for a cup of coffee.

DARRIN T. MISH:   Yeah, but now, there’s a huge percentage of the population goes to Starbucks every day, drops 7 bucks, some of them, well sometimes multiple times a day and these are sometimes the same people crying the blues, that they don’t have any money.

KATRINA MADEWELL:  Well, you know, a lot of people listen to the show, maybe are catching this after a Dave Ramsey show, and so, that’s one of the biggest things, biggest examples we talk about, you know kick the Starbucks habit. If you don’t have a written budget which is FPU101, start with your bank statement and look at last month and itemize what you spent where. Try to figure out where your money went last month.

DARRIN T. MISH:   I actually don’t drink coffee, so I don’t know if I’m even qualified to talk about this, but I do know when you go to the grocery store, you can buy really high end coffee and it doesn’t even come close to $7 a cup. And coffee machines, are cheap, and sometimes free. Isn’t there that one coffee brand that will send you a coffee pot if you sign up for their subscription?

KATRINA MADEWELL:   Probably. I’m so spoiled with my Keurig, that it’s just my thing. So anyway our show for today is not coffee believe it or not, but is 9 tips to keep in mind when you have to amend your tax returns. You want to jump in number 1, which is it must be filed on paper.

DARRIN T. MISH:   Yep, cannot be e-filed. Just cannot happen. It has to be filed on a form called a 1040X. The forms not really hard. The 1040x is a 1 pager but typically when you amend your tax return, you have to amend how you wanted the 1040 to look, and yeah it cannot be filed electronically and has to be filed on paper. You can get the form at IRS.gov, that’s gov, and important to know, you need to send that in via mail and I would suggest you send that certified mail every time. I have a rule in my office, and that is that when you’re asking the IRS for something, it has to be certified mail for sure. If there’s any kind of deadline at all, even deadlines you’re not aware of, it has to be certified for sure.

KATRINA MADEWELL:   Isn’t everything with the IRS, now pretty much on paper with the exception of the original 1040s that get e-filed? I’m just curious about that.

DARRIN T. MISH:   You mean, everything else that you send in?

KATRINA MADEWELL:   Yeah, like we can file electronically now because the IRS has come a long way that allows you to do that, isn’t that pretty much the on time early returns that can be filled online?

DARRIN T. MISH:   Well, actually they extended the e-filing to where you can file some late returns too, and I think it goes back to 3 years which is kind of cool because in my practice we do an awful lot of returns that are way past the deadline, and so you can e-file some of those. The funny thing is, the IRS’s idea of high tech technology is a fax. The explanation is that they’re using fax because it’s more secure than email. Here’s the irony in this statement. Probably the answer is some crony, you know owns the e-fax company. But needless to say, those 1040 X’s need to filed on forms. Get the forms on the IRS website.

KATRINA MADEWELL:   So, what’s number two on our list of 9 tips to keep in mind when you have to amend a tax return?

DARRIN T. MISH:   When you want to amend and/or correct errors, and there was a caller last week called Shirley, and I wish that she had called this week because….

KATRINA MADEWELL:   I think we’re messing her name up

DARRIN T. MISH:   I think she was Australian or something, so her question was. She had a couple of years of returns that she had left off for some rental property and she wanted to know if it was worth it to go ahead and amend and if she was going to amend, should she use a tax preparer, or should she do it herself, and the answer is I think she should use a tax preparer to do the amend depreciation, even if it doesn’t generate a large refund. She should go and amend those returns because leaving the depreciation off is an error and could, although I think unlikely, could lead to an audit and then now you got real problems here…

KATRINA MADEWELL:   But now, the depreciation is in her favor.

DARRIN T. MISH:   Yeah, the depreciation is in her favor and it is my understanding that the depreciation cannot have a lapse in it, so she needed to fix her returns so that she could continue to depreciate those rental properties in years going up forward.

KATRINA MADEWELL:   Maybe she was worried about an audit or something in between

DARRIN T. MISH:   Yeah I don’t know what exactly she was worried about, but I think we put her on the right track.

KATRINA MADEWELL:   Yeah, we only had a couple of minutes to answer questions, so it was really fast.

DARRIN T. MISH:   She actually sucked up the train wreck on the segment of the show.

KATRINA MADEWELL:   You promised too, this week that we’re going to do it.

KATRINA MADEWELL:   So number 3 on our list, is don’t amend for math errors for missing forms?

DARRIN T. MISH:   Yeah, let’s talk about what math errors are. Math errors are arithmetic errors, you know when you’re doing a return by hand, and you add up the numbers wrong.

KATRINA MADEWELL:   I haven’t even heard that word in so long, I’m just saying

DARRIN T. MISH:   So, you’re saying though that you have the tax preparer person, make sure they didn’t master in English. They should master in you know, Math.

KATRINA MADEWELL:   You know the crazy part is, I could totally see that happening, because we see math errors in appraisals, whether their making adjustments like to the subject property, it should be better or worse, and they adjust it the wrong way.

DARRIN T. MISH:   Yeah, you don’t see a lot of math errors on computer generated returns anymore because the computer isn’t going to make an error adding 6 plus 9. It’s just not going to happen. But it does happen on preparer’s returns. I didn’t think many people did that, but a lady came in last week and she showed me 3 years’ worth of returns she had done, long hand using a pencil, and I was like, I didn’t say this to her because I didn’t want to hurt her feelings. I was like “whoa, I haven’t seen one of those in 15 years.

PAT GEORGE: What, a pencil?

DARRIN T. MISH:   Yeah, a pencil, or a handwritten return. Well, when you do handwritten returns, you should use a pencil, and that’s because you can erase the mistakes, but then you can’t send it in in pencil. It has to be photocopied first, and then you can sign it and send it in like that. Back in the day, that’d what I would do when I had to do a return by hand. Let’s say I had to do a return by hand because it was from 9 years prior and I didn’t have the software.

KATRINA MADEWELL:   Oh, there’s the music, you’re listening to 9 Tips to keep in mind when you have to amend a tax return, and when we come back, and we’re going to hop in number 4. You’re listening to the IRS solution attorney show, with Mr. Darrin T. Mish, and we’ll be back in just a minute.

KATRINA MADEWELL:   Welcome back, you’re listening to the IRS Solution Attorney show, with Mr. Darrin T. Mish.

DARRIN T. MISH:   That would be me, the IRS solution attorney.

KATRINA MADEWELL:   And I’m your cohost, Katrina Madewell. Thanks for sticking with us during the break. If you’re just catching the show, we’re talking about 9 tips to keep in mind when you have to amend a tax return, and I think we left off on number 4, which is form 1095A. Health Insurance.

DARRIN T. MISH:   Yeah, the 1095A is this weird Obamacare thing that we get now, it’s only been at it for a year or two and what it is, it’s a form that covers whether or not you’re covered with healthcare for the year. And some taxpayers may get a second form because the information on their initial form was incomplete or incorrect. If you filed a 2015 tax return based on the initial form 1095A and claim the premium tax credit is in the incorrect information than you’re going to have to go ahead a file to fix that. Otherwise, you’re going to get a love letter from the IRS probably a letter called the CP2000 and they’re going to fix it but when they “fix it” and this is in quotes, they’re going to fix it in their favor and not your favor so you’re going to want to get that done. It shouldn’t affect that many people, but you never know. If you’re the one that is listening, and that is your problem then you’re going to want to ahead and file.

KATRINA MADEWELL:   Have you seen any audit related stuff to this Obamacare responsibility payment craziness?

DARRIN T. MISH:   We haven’t seen the full blown audit, you know, because there’s not much to audit there. It[s either you’re covered or you weren’t covered

KATRINA MADEWELL:   I was just curious, I guess audit was the wrong word.

DARRIN T. MISH:   Yeah, we’re starting to get weird notices, and remember the bizarre name they call it. They call it the shared responsibility payment because we’re in 1984 world, George Orwellian. What the heck is a shared responsibility payment? Well, what it is.

KATRINA MADEWELL:   I heard it was health insurance

DARRIN T. MISH:   Yeah that’s the IRS’s bizarre way of saying that you have the penalty of Obama Care. I guess they didn’t want to put Obama’s name on the…they didn’t want to call the penalty Obama, or Obamacare so they called it shared responsibility payment.

PAT GEORGE:     We all have the shared responsibility, to make sure we all have health insurance.

KATRINA MADEWELL:   and to pay our taxes

PAT GEORGE:     Not. Anyway

KATRINA MADEWELL:   So, our topic for today is 9 tips to keep in mind when you have to amend a tax return and number 5 is a 3 year time limit

DARRIN T. MISH:   There is in fact a 3 year time limit to amend a tax return and why is this important? Well, it’s important because there is a 3 year statute of limitations to obtain a refund as well. So, what we see in this context is, you see this quite a bit…

KATRINA MADEWELL:   And I don’t understand that, I’ve seen people that don’t, I had a lady once that hadn’t filed tax return in years, and she was an employee of the schools, so she was a W2.

DARRIN T. MISH:   I see it all the time

KATRINA MADEWELL:   It just didn’t make sense, like you should be getting a refund every year.

DARRIN T. MISH:   I have a good friend that works at one of the big boat marine supply companies in town, and we got to be friends over the years because I kept going in there and buying stuff, and one day he shared with me, he asked me what kind of attorney I was, early on in our relationship and I told him…

KATRINA MADEWELL:   Wait, how do you answer that.. when someone asks you what kind of attorney are you, what do you say?

DARRIN T. MISH:   Oh, I say oh well I help people who owe too much money to the IRS by getting out of paying it, that’s what I say. Now, here’s the disclaimer real quick ok. Now, I cannot help every person in every situation and I can’t guarantee results.

KATRINA MADEWELL:   That’s my attorney answer

DARRIN T. MISH:   That’s the Florida bar disclaimer. I cannot help everybody in every situation but that’s what I typically tell people when they ask me what kind of work I do. When I was a criminal defense attorney, and I told people what I did at a cocktail party, they would kind of go, “oh, how nice’ and they would kind of slink away and I would never see them again. But nowadays when it happens, almost everyone says oh let me get one of your cards, you just never know and that’s because all of us are taxpayers in one way, shape or form

KATRINA MADEWELL:   Either they owe money, or they know someone who owes money or they are scared that one day they will owe money

DARRIN T. MISH:   Yeah, I have a tendency to hang around with entrepreneurs and small business owners and things.

KATRINA MADEWELL:   And they always owe money

DARRIN T. MISH:   Yeah, they always owe money, and so it just makes a really good recipe but  this particular gentleman was working at the marine supply house for years, decades, and he shared with me, he goes “Darrin, I haven’t filed a tax return in a long time” I’m like “What!”

KATRINA MADEWELL:   That’s a long time.

DARRIN T. MISH:   And he says “Yeah, I just don’t believe in being in the system, and if they don’t know what I’m doing, then I’m happier. It’s a privacy thing, and I’m like dude, you’re getting w2’s, they already know how much money you make, they already know who you are. The only reason why they’re not preparing returns for him is because he was entitled to refunds for decades, so they were just chalking it up to cool, we’re going to keep that guy’s money. Ultimately, we had to get him for another reason, we had to get him caught up, and so we did the last 6 years of returns because that’s kind of our standard practice. If you’re a non-filer for many years, you don’t have to file the past 6 years because the statute of limitations for the crime of failure to file a tax return is 6 years so we got him filed the past 6 years, got him caught up to date.

KATRINA MADEWELL:   So, he has to file for 6 years, but only gives 3.

DARRIN T. MISH:   He only got the refunds for 3 years, so…

KATRINA MADEWELL:   Seems a little unfair, but you know.

DARRIN T. MISH:   It is! But you know the tax laws were not written for the people. They were written for the government and were written to generate revenue. Whatever reason Congress has decided that 3 years is an appropriate time to get a refund. Now interestingly, was there any penalties and interests applied to those refund returns that weren’t filed on time? Do you know the answer?

KATRINA MADEWELL:   No, is this a trick question?

DARRIN T. MISH:   Were you saying that you didn’t know the answer or…

KATRINA MADEWELL:   No, what I’m saying is you definitely have to check because I learn a lot from the show, I don’t remember everything. I can just call you and ask you everything I don’t remember. But what I’m thinking is, that they are entitled to interests, right? But not penalties, is that right?

DARRIN T. MISH:   Well, typically, you don’t see interests on there, but there are no penalties. No penalty for filing a late refund return.

KATRINA MADEWELL:   Do they get interest?

DARRIN T. MISH:   Typically not. There are some situations where you’re going to get interest on a late refund. I do know you can interest off that, actually I’m not remembering right now if you get interest on a late, typical late file, not really sure, not remembering that.

KATRINA MADEWELL:   Because that’s not your normal client.

DARRIN T. MISH:   Yeah, and usually, the refunds are offset by the money they owe.

KATRINA MADEWELL:   I don’t think anybody cares, that’s probably why their getting money, because they don’t owe any money. They’re not really looking but I want to say they do. I just can’t remember for sure.

DARRIN T. MISH:   So there’s a 3 year time limit to file the amended returns, and that’s just really important, so for example, if you have a 2012 tax return that you wanted to amend, and it’s too late. It had to be filed by April 15th, I believe. We’ll call it the 18th in this case. But I think it had to be filed by April 15, 2016. And it’s now past that, so you can no longer amend a 2012 tax return for really any reason.

KATRINA MADEWELL:   So, number 6 on our list of things that are 9 tips to keep in mind when you have to amend a tax return is going to be, I can’t believe this is on here, so you’re going to have to clear the air on this one, but separate forms for each year, really?

DARRIN T. MISH:   And you don’t believe it’s on there, because you think it’s too obvious?

KATRINA MADEWELL:   Well, yeah, I mean people really try to file one year together for many?

DARRIN T. MISH:   Yeah, for sure, they do. It actually makes sense. Any other business that you’re doing business with, you can put, if you are paying. Well I guess that’s not a good example

KATRINA MADEWELL:   Yeah, because I’m really trying to follow number 6 on the list

DARRIN T. MISH:    Any other business, you could put like stuff in an envelope to the same organization that you’re dealing with, and they can handle that. Well the IRS cannot handle having 2 years of information in one envelope. They cannot handle it. What they do, is they staple the stuff together and it gets sent off to processing. It gets processed as one year. So what I would say is in Shirley’s case, that’s her name, case from last week. She had 2 years to amend? Do separate 1040x’s for each year and then put those in separate envelopes and send them separately, otherwise

KATRINA MADEWELL:   They can’t even be in one envelope

DARRIN T. MISH:   No, they cannot. If they are in one envelope, it is going to be stapled together, and it’s going to get jacked up. That’s the technical term. Yeah it’s just one of those things that you learn when dealing with the IRS. There are certain things that get short circuited no matter what.

KATRINA MADEWELL:   Did you know that Pat? Like did you imagine in a million years that if…

PAT GEORGE:     Absolutely not. I think that’s crazy. Because say in 6 years, you have to send in 6 pieces of different envelopes, and say one of those get lost and you have to start all over

KATRINA MADEWELL:   You think it would be stapled anyway

DARRIN T. MISH:   And all 6 of those should go certified mail because you’ll want to be able to prove and on the certified slips, you’re sending a whole bunch of them, make sure on your receipt to write some kind of notation that it was in each envelope, otherwise they might want to play the shenanigan

KATRINA MADEWELL:   Wait, what are you saying?

DARRIN T. MISH:   On your receipt, you know that green slip you get, make a little note of it so you know what year the certified slip went too, otherwise you have no idea, let’s say one get lost, you’ll be like, great I lost. Incidentally, I think the postal service is darn reliable

KATRINA MADEWELL:   Did you know that postage went down?

DARRIN T. MISH:   I know, that’s amazing. On someone that spends a lot of money on postage, I’m really happy to see that, but first time in history.

KATRINA MADEWELL:   I know, I saw that on the news and I was like what?! Their saying their trying to generate revenue for the postal service.

DARRIN T. MISH:   I think, if I was in charge, I’d probably just round it up to.50

KATRINA MADEWELL:   You’re listening to the IRS Solution Attorney Show. We have to take a break at the bottom of the hour, our studio calling line is 888-404-1010. If you want to catch Darrin in his office, 888-GetMish. We’ll be back in just a minute and we’ll hop to number 7

DARRIN T. MISH:   Welcome back to the IRS Solution show. I am the IRS solution attorney and joined again by my cohost Katrina Madewell. How you doing?

KATRINA MADEWELL:   Doing great, Mr. Darrin T. Mish.

DARRIN T. MISH:   Today. we’re talking about the 9 times when you’re amending your tax return because we’re past the tax season now, and now we’re thinking about wow, I might have made a mistake

KATRINA MADEWELL:   Last week, like Monday,

DARRIN T. MISH:   Yeah, might have made a mistake on your tax return, oh oh what do I do now?

KATRINA MADEWELL:   To do a quick recap, because we know with talk radio, you’re getting in and out of your car, and so you can catch this entire show on a podcast in its entirety

DARRIN T. MISH:   On ITunes, just search for Darrin Mish or you can search for IRS problem solvers. One of those things when we can’t reconcile. Our Android app is out, which is pretty cool, and our app for iTunes should be coming out any day. When the app comes out, or if you have an android, go ahead, and download that. You can listen to all the shows in its entirety. Not sure if the commercials are in there or not but…

KATRINA MADEWELL:   There are. Thanks to our sponsors.

DARRIN T. MISH:   So I have clients that call in from all over the country. A lot of people don’t know this, they think that I’m in Florida and I can only represent taxpayers in Florida. But because the IRS is federal, I can represent clients in all 50 states and I have

KATRINA MADEWELL:   Even in other countries, other people have called you.

DARRIN T. MISH:   Americans in other countries have to file tax returns and I have represented clients in every continent except for Antarctica. I have a standing offer if you are an American and are in Antarctica and have a tax problem, call me, I’ll take care of it for free. Gotta wrap up the entire world. I did some research and I think it’s the Ross station, I’m not sure, but there’s a large town on Antarctica during the summer months of Americans. Thousands of people are there

KATRINA MADEWELL:   You’ll have to take a business trip there during that time.

DARRIN T. MISH:   There’s actually hundreds of people that over winter in Antarctica, which is not my thing, but I gotta say it looks like a cool place to go during the summertime for sure.

KATRINA MADEWELL:   So, our 9 tips to keep in mind when you want to amend a tax return, is number one, you must file it on paper.

DARRIN T. MISH:   Yeah, must be filed on paper, cannot be e-filed. Number two is you would amend a tax return to correct errors and the errors don’t have to be in your favor or the IRS’s favor, you just want to correct errors. And I’m talking about significant errors, not talking about number 3 which is math errors, if you added 15 plus 16 wrong, then the computer at the IRS will take care of that for you and they will send a letter saying “hey we caught a math error and we’ll take care of it” I don’t see many notices like that anymore but they do happen.

KATRINA MADEWELL:   Number 3 on our list is don’t amend math errors or for missing forms

DARRIN T. MISH:   Absolutely, so if you’re missing a tax form like a W2 or some kind of schedule, the IRS will go ahead and mail you a letter saying” oh we need a copy of it or whatever” Have an interesting case going on right now, where they are saying the W2’s weren’t mailed in and the irony is we got the transcripts of the W2’s that were sent to them by the employers, and the IRS got them all. So in our response, we sent them copies of the IRS’s own transcripts and hard copies of the actual w2’s that the taxpayers had in their possession. I don’t know what happened in that case, just some kind of computer snafu. Number 4 is you might have gotten two 1095A’s which is the Obamacare statements showing how much of a subsidy you got if you got one, and whether or not you had health insurance or not for the year. Sometimes you’ll get two in a given year, you might get the second one after you file your return. If that happens to you, amend it and return it.

KATRINA MADEWELL:   3 year time limit with number 5

DARRIN T. MISH:   Yeah, there’s a 3 year time limit. If you wanted to amend a 2012 return, it’s too late now to do that because it was due in 2013, and April 18th in this case has already passed so it’s too late to file.

KATRINA MADEWELL:   Number 6 was filing separate forms in separate envelopes for each year. You want to go ahead with the next segment?

DARRIN T. MISH:   Yeah, you’re going to want and go ahead. If you’re going to amend a tax return, you’re just not going to want to amend, you just want to do separate paperwork and send it in separate envelopes for each year

KATRINA MADEWELL:   And that brings us up to speed with number 7 which is attaching other forms to the changes.

DARRIN T. MISH:   Yeah, let’s say you found a mistake on your itemized deductions on schedule A. Maybe you put the mortgage interest down wrong or maybe you didn’t include the mortgage interest for your second mortgage. That could happen, right? So you want to change the schedule A. Well you can’t just write down on the 1040X, the change and not show schedule A. to show what change you made, and you should also show what change that made to do on the whole 1040 itself. So you might want to attach the other forms with the changes. Remember when we were kids in school, in Math and they always said show your work. That’s what we’re doing here. We’re showing our work. If we’re not showing our work, than we’re not going to get it changed. Interestingly, a lot of people don’t know this, but you’re not entitled to have an amended return accepted, did you know that? If you file an amended return that is just phony bologna, just crazy. The IRS is going to look at it

KATRINA MADEWELL:   They’re going to reject it?

DARRIN T. MISH:   Their just going to be like, no, we’re not taking it. You don’t see it that often, you typically see that it’s kooky, and you know it’s going to get figured out.

KATRINA MADEWELL:   So number 8 on our list is when to file for corrected refund.

DARRIN T. MISH:   So, if you do a refund from your original return, wait to get it before filing 1040X to claim an additional refund. A matter of returns can take up to 16 weeks to process and what will happen is you will delay your entire refund because they’re going to wait to file and to process the amended return. So, I wish I didn’t take up to 16 weeks for amended return but it seems to be the current

KATRINA MADEWELL:   Unfortunately the IRS isn’t fast, nor the government

DARRIN T. MISH:   Except for levies and liens. They can be faster than we’d like right?

KATRINA MADEWELL:   But that’s usually a process that gets you to that point.

DARRIN T. MISH:   They actually aren’t fast, but they just seem fast when you’ve been burying your head in the sand for years.

KATRINA MADEWELL:   Number 9 on our list, is pay additional tax so if you owe additional taxes

DARRIN T. MISH:   Yeah, if you owe more tax you’re going to want to file your 1040X and pay as soon as you can, otherwise you’re going to have more penalties and interest in running up to the tax you owe. Incidentally, it’s backdated to the due date of the return, so let’s say you had to file a 2015 return, you filed it on April 18th and then in June, you realize you have to amend the return because you owe some more tax. Well, you have to pay the penalties and the interest on the tax back to April 18th. Don’t worry about calculating that, the IRS will be more than happy to calculate that for you and send you a bill.

KATRINA MADEWELL:   So, if you want to reach out to Darrin, you can get him on his office line which is 888-GETMISH.

DARRIN T. MISH:   888-438-6474

KATRINA MADEWELL:   And he’s on Twitter @Darrin_Twitter?

DARRIN T. MISH:   That would be kind of cool, it’s Darrin_Mish

KATRINA MADEWELL:   Wait, what did I say?

DARRIN T. MISH:   You said Darrin_Twitter

KATRINA MADEWELL:   See, I’m tired

PAT GEORGE:     What is your cell number?

DARRIN T. MISH:   My cell number is 888-438-6474, no, not really

PAT GEORGE:     Look at that, he gives out his cell too.

DARRIN T. MISH:   Incidentally, I have a friend who has a billboard in Tampa

KATRINA MADEWELL:   You forget that these people don’t sleep at night Pat so they’ll be calling him literally when Darrin is trying to sleep and get up the next day to help somebody on a normal schedule.

DARRIN T. MISH:   I have a friend that has billboards in Tampa. He’s a personal injury attorney and he says call me on my cell and has his cell number on the board.

KATRINA MADEWELL:   I drove past it the other day and I’m like what?

DARRIN T. MISH:   I was talking to him a few months ago, and I was like dude, every time I’m coming back at night, I feel like calling you on your cell and don’t think people don’t do that.

KATRINA MADEWELL:   Oh, I’m sure

DARRIN T. MISH:   And he said, yeah, people do that. But…

KATRINA MADEWELL:   Probably all hours of the night

DARRIN T. MISH:   Yeah, probably

KATRINA MADEWELL:   So we did get some questions. One of the questions we got from our listeners and we had a lot last week, we didn’t get a chance to get to them all. I’m a little bit nervous about my return because I fudged some numbers a bit when I was using TurboTax. It wasn’t much but it did give me an extra 775 bucks on my refund. Should I file an amended return? That’s from Josie

DARRIN T. MISH:   Well Josie, I don’t know.. What is your tolerance for risk? Ok, so the standard is…

KATRINA MADEWELL:   Well, I say don’t poke the beast.

DARRIN T. MISH:   Oh really, so the non-attorney advice is ah

PAT GEORGE:     She’s only saying that cuz you’re on her side, that’s why she’s saying that

DARRIN T. MISH:   Katrina’s advice is ah, it’s only 775 bucks

KATRINA MADEWELL:   Not my advice, just my thought.

DARRIN T. MISH:   No, that’s her advice, we’re going to go down on record as that’s her advice but no, Josie, I think you ought to do the right thing.

KATRINA MADEWELL:   So, you’re saying file an amended return?

DARRIN T. MISH:   I think you should file an amended return and own up to the fudging. Let me tell you why.

KATRINA MADEWELL:   That’s a better answer

DARRIN T. MISH:   I think I shared the other day, I was at lunch with a former tax division attorney from the United States Attorney’s office so his job used to be to prosecute taxpayers or non-taxpayers in this case, so he would prosecute people for tax crimes, is a better way of saying it and so at lunch we were talking and I was trying to get him to tell me, like how do you make prosecution decisions, because most of my clients are non-filers, meaning they haven’t filed a tax return in a long time and that’s technically a crime, to not file a tax return. It’s called failure to file and it’s a federal misdemeanor. He says, you know Darrin, we didn’t use to prosecute many people for failure to file because it’s a misdemeanor, and it’s not all that sexy. It doesn’t get us worked up. But the people that we would like to prosecute were the people who committed tax fraud. Now Josie, I think what you have done is tax fraud in a way. Do I particularly think its serious tax fraud, no I don’t think it’s particularly serious but I think it is. If you lie or do a misinterpretation or fudge.

KATRINA MADEWELL:   That was the word.

DARRIN T. MISH:   If you fudge on your tax return knowingly, technically you could be prosecuted for a crime, and I don’t know about you but 775 bucks is not worth the risk.

KATRINA MADEWELL:   Not worth fighting with the IRS.

DARRIN T. MISH:   It’s not worth any risk of going to prison, do I think it would happen? Not really but there is a small chance that could happen but …

KATRINA MADEWELL:   You think they look more on people with audits for fudging if they get a refund vs not?

DARRIN T. MISH:   I don’t know if I ever represented a taxpayer with an audit that didn’t have any fudging going on.

KATRINA MADEWELL:   Well, I’m sure

DARRIN T. MISH:   I would say the correct answer is go ahead and amend that. You can sleep better at night, you’ll feel better about yourself.

KATRINA MADEWELL:   It’s obviously bugging her since she asked us.

DARRIN T. MISH:   Yeah, exactly. TurboTax has the running little tab going on, and I know about the temptation and I don’t blame you. But I think you should fix it,

KATRINA MADEWELL:   So, we do have another question from Rick. He wants to know how bad is not having health insurance going to affect my tax bill. I’m 23, I just graduated from school, and I’m great in health. So he’s good in health but just doesn’t have health insurance. He just doesn’t know why he has to get insurance at all. Which is a valid question for 23 year olds.

DARRIN T. MISH:   I’m not that boned up on this stuff, I think that penalty for this gentleman is going to be really small because the penalty is based upon your income

KATRINA MADEWELL:   Well, he just graduated from college

DARRIN T. MISH:   Yeah, so I heard that the penalty can be as low as 25 bucks but I also heard it can be in the 1000’s. I personally know people who were fined a couple 1000 dollars but I think that was based on their income, so it’s a sliding scale kind of thing. You will have to make the decision Rick whether to pay the money for health insurance or if you want to pay the penalty. I don’t think it will be that much though.

KATRINA MADEWELL:   You’re listening to the IRS solution attorney show. We have to take this quick break. We’ll be back in a few minutes.

KATRINA MADEWELL:   Welcome back, you’re listening to the IRS solution attorney show, with Mr. Darrin T. Mish.

DARRIN T. MISH:   You forgot to say the IRS solution attorney, and that would be me.

KATRINA MADEWELL:   Now, it’s been a long day already.

DARRIN T. MISH:   Now, today we’re talking about 9 tips to keep in mind when amending tax returns… Now I don’t think we have time to recap during this segment…

KATRINA MADEWELL:   No, we don’t, we did earlier but you can catch the whole show on a podcast in its entirety.

DARRIN T. MISH:   I think we’re on number…

KATRINA MADEWELL:   We did all 9.

DARRIN T. MISH:   No, we didn’t do number 8. That’s when to file for a correct refund. If you do a refund from your original return, wait to get it… oh wait, we did talk about that, come to think of it. Number 9 is actually. I think we did.

KATRINA MADEWELL:   You did. You’re going to have to listen to your own podcast Darrin.

DARRIN T. MISH:   You know, when you do enough radio, you kind of lose track of what you said before and you can’t remember.

KATRINA MADEWELL:   Sometimes they run together especially when you have a couple hours of time.

DARRIN T. MISH:   Kind of like a senior moment actually.

KATRINA MADEWELL:   Oh I love that, I’m surprised I didn’t think of that first. Oh, well it’s about that time.

DARRIN T. MISH:   This week, we have a double IRS train wreck of the week.

KATRINA MADEWELL:   That’s right, we ran out of time last week

DARRIN T. MISH:   We ran out of time last week so we’re going to reward you this time with 2 IRS train wrecks. Really interesting case that was settled last week, I was really happy for her. What happened was this older couple came in and they showed me a bill from the IRS for 58,368.25.

KATRINA MADEWELL:   What did the bill say, I’m just curious. I’ve never gotten a tax bill for that so what does it say when they bring it in?

DARRIN T. MISH:   It depends on how many prior bills they’ve gotten, if it’s a first bill that says 58,368.25 and you have 10 days to pay it,

KATRINA MADEWELL:   That’s a little scary, no wonder they come running to your office, now I get it.

DARRIN T. MISH:   Now, if they’ve gotten prior notices, than they get increasingly more frightening, and start threatening to take your stuff. Now generally, that’s what generates some kind of actual interest and they come in and deal with it. In my case, they brought me this bill for 58 grand and as of my practice, I asked what happened. What generated this tax bill and she said, well, I had some student loan debt that just out of the blue was forgiven and then I thought that was great, and then out of the blue I got a 1099C for cancellation of debt so I learned that Congress says I have to pay taxes on debts that are cancelled as if I had gotten the money to pay the debt off and so when I did my self-preparer tax return I owed 58 grand like what am I going to do. I don’t have that kind of money, we’re living on a fixed income like we’re in big trouble here. Now in the second train wreck, we’re going to talk about a successful compromise but in this case, offer/compromise isn’t the easiest and cheapest way to get this done. I identified that she was in solvent at the time the debt was canceled. Let’s face it, the creditors just write off debt if you have money… but usually right? SO in this case what we had her do was she filled out a solvency worksheet, we filed an amended return

KATRINA MADEWELL:   We talked about insolvency a little bit. I know what it is, but can you explain to the person listening what it is?

DARRIN T. MISH:   Sure, insolvency is when you’re liabilities and your bills outweigh your assets, your stuff, your money, and your valuables. In this case, most people, if they’re not insolvent their pretty close don’t you think.

KATRINA MADEWELL:   A lot, I don’t know. Dave Ramsey works on this show, and he promotes saving. Could be a good mix.

DARRIN T. MISH:   Yeah, homeowners are usually not insolvent because they have some equity in their house or they own some stocks or bonds, and retirement accounts… But a lot of people that come to me, because they have big debt problems, they’re insolvent. This lady was insolvent… she fought an amended tax return. You know what the coolest thing was? She got a $7,678.19 refund so we turn that case around.  I won’t say what the fee was but it was way less than the refund check.

KATRINA MADEWELL:   We have to lad up some boom music for stories like that.

DARRIN T. MISH:   Yeah, I feel like dropping the mike, but it’s on a boom hear. But yeah, that was a pretty good solution in that case and I have to say I was really happy for them. I know they are pretty happy as well.

KATRINA MADEWELL:   That’s a pretty good resolution for a 58,000 tax bill

DARRIN T. MISH:   For sure. In our second train wreck of the week, we’re going to talk about an offer/compromise that worked. Now, this is an interesting case, it was a retired couple that lived here in the Tampa area, and what had happened was the husband was the only one that owed the tax debt. The wife did not owe at all. They were living off a fixed income, and they had moved to another area. They had gone through a bankruptcy earlier for some other tax debt and other debt in general. Taxes were not entirely disrupted in the bankruptcy, so after, he came back to me. I cannot represent him while he’s in bankruptcy because the bankruptcy stops everything. Puts everything on IRS. So he came back to me afterwards, and he owed 109 grand and change. He still owed 109 grand after the bankruptcy. The cool thing was he was in a chapter 13 for a lot of years, and so he got older and his financial situation got worse, so we filed an Offer in Compromise. I don’t remember exactly what we offered, but it was a small amount, like 7500 dollars and came back to being settled to 9150 and I follow the wife and couple on Facebook, and she follows me, so I can see what their life is like. Makes me feel good, this is an older couple with them living the rest of their life by being tax free. Let’s face it, we have limited time here on the planet. You can spend the time worrying about the IRS or on cruises.

KATRINA MADEWELL:   That’s just crazy, seems unconstitutional to me.

PAT GEORGE:     I’m going on the cruises.

DARRIN T. MISH:   Actually yeah, I follow Pat on Facebook as well, and Pat went on a cruise. The day he got off, he didn’t look good.

PAT GEORGE:     Well, we had a lot of fun.

DARRIN T. MISH:   Looked like you had fun, were you able to post on Facebook from the ship?  I think you did.

PAT GEORGE:     Only until you get to the skyway and then it’s over

DARRIN T. MISH:   There is Wi-Fi on the ship.

PAT GEORGE:     Like 43 dollars a minute.

KATRINA MADEWELL:   There’s a reason why it’s so expensive. It’s because when you go on a cruise, you’re supposed to be disconnected, that’s the whole idea.

DARRIN T. MISH:   I got you. You shouldn’t be in the Internet cafe, working on taxpayers’ problems.

PAT GEORGE:     I wouldn’t recommend getting a big room because everybody comes in your room and parties, and that’s why I looked that way.

DARRIN T. MISH:   You had the big junior suite or whatever.

PAT GEORGE:     And the big balcony and no one fell over.

DARRIN T. MISH:   So, my kids have been on so many cruises that now their talking about they want to get the suite, the stern and the butler. My kids aren’t spoiled at all.

KATRINA MADEWELL:   My kids are lucky if they even go.

DARRIN T. MISH:   They are the reason why I do what I do.

KATRINA MADEWELL:   You’re listening to the IRS attorney solution show. I’m sorry we didn’t take any callers this week, we had promised the double IRS train wreck this week. But you can reach Darrin at 888-GETMISH. Thank you for listening.

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