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Daycare and Taxes>Tom Tax Question
Unregistered 11:05 AM 04-18-2012
I discovered I have been making a mistake on my taxes for a few years, this year I corrected the mistake.

I am uncertain if I should amend past years or not? Will amending increase my chances of being audited and then would they go back to the very first year I messed up? It was not fraud, it was an honest misinterpetation of a rule.

I've been given all sorts of advice from amend the years 2009 and 2010 to don't amend and see if they catch it. I worry that I would get in trouble if I don't amend and they catch it.

Thoughts? Will I be putting myself at a bigger risk and am I legally obligated to amend?
TomCopeland 06:43 AM 04-19-2012
Amending your tax return does not increase your chances of an audit. The chances of being audited is less than 2%. The IRS can only audit back three years unless: you didn't file a tax return, you committed fraud, or you underreported your income by more than 20%.

If you don't amend and the IRS audits you, you will owe taxes, plus interest. You will owe more in interest the closer the IRS audits you to the 3 year deadline. The amount of interest is 4% a year.
MN Day Mom 07:57 AM 04-19-2012
Would not amending be fraud if she knows she's been making an error in the past and corrected this year?

I messed up myself and will be amending, from my understanding, if they go back 3 years I only need to amend 2009 and 2010?

I hope I can figure out how to fill out the 1040X without too much of a headache or find a tax person that doesn't charge an arm and a leg! Mine should be a pretty simple fix.
TomCopeland 03:19 PM 04-19-2012
Is it fraud not to amend your tax return when you know you made a mistake? I suppose so.

Right now you can amend for 2010 and 2009. After you get your refund or paid taxes when filing your 2011 tax return you can amend 2011.

My book Family Child Care Tax Workbook and Organizer has a chapter on how to amend your return, going through IRS Form 1040x line by line.
Tags:audit, irs
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