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Early Tax Season Observations

Posted by Admin Posted on Feb 14 2014

We all like to try and file early.  However, filing early may not be the best. This year appears to be the year of the amended returns. People want to file and they send their paperwork in to us. After preparing the return, and submitting it to the IRS, the taxpayer finds another 1099 etc that they forgot all about.   So, if that happens, what do you do?   Well, if we are lucky, and the return has not been submitted by our vendor to the IRS, we can recall the return and fix it. But, once the vendor sends the IRS the return, are options become very limited - basically we have only 1 alternative. Thus, we will have to amend the return.

Once the IRS has "accepted" the return, your refund (if any) will be automatically generated. That cannot be stopped. So, we will amend your return and you will have to pay the additional tax back to IRS.  At this time, amended returns can only be filed by paper (no efiles allowed). Also, we recommend waiting approximately 6 weeks to file the amended return in order that the IRS has time to update all of their systems with your data.  Nothing is worse, than the IRS sending back a return because they do not have the original return in their system. However, to minimize the result of your amended return, you really should get it filed by April 15th. But, you can wait to file; just know penalties and interest will be accruing.

So, when should you file?   I personally, do not like to process any 1040s prior to February 10th.  Yes, the 1099 and W2 deadline is January 31st but we all have received those "late" 1099s and W2s in the mail.  As the tax code has gotten more and more complicated, the 1099s for investments have been delayed later and later. And, we are seeing more and more Corrected and Amended 1099s for them. So, if you have a brokerage account, you may want to wait until mid to late March to file.  And don't be surprised to receive a corrected 1099 from your brokerage account in August - saw it twice last year.  

The main thing is not to panic. It happens.  File the amended return and pay the tax.