Johnny Jingles filed his return and then he realized that he didn’t claim the unemployment payments he received when he was laid off at the beginning of the year. Now he has a decision to make – to file or not file an amended return – that is the question.
Johnny Jingles, so named by his friends because he always had his hand in his pocket and was always jingling his change, is well known in the community. Jingles is an off and on worker and when he isn’t working he spends most of his time walking around in the stores and plazas talking to anyone he can engage in a conversation. He often talks to me as I grocery shop and since he talks to everyone, he knows what everyone does to earn their living. Now, he’s a smooth talker since he’s had so much practice, so he goes about getting free information from people by carefully easing into questions that he needs answered. This was just the case the other day in the grocery store.
“Hey there, how’s everything going in that tax office of yours?”
“It’s going OK Johnny, a little busy lately dealing with extended tax returns. How are you today?”
“Oh, I’m not bad. I’m laid off right now so I’m just keeping myself occupied here and there. You’re not buying those bananas here are you? They’re on sale at the Big GE Grocery Store.”
“Well, I didn’t know that. Maybe I’ll just buy a small bunch here and then I’ll get more at the Big GE when I stop there tomorrow.”
“Yeah, that’s a good idea. Sometimes it’s good to wait before you do something. Just like, I should have waited to file my tax returns. I filed them in a big hurry so I could get the rebate and then I got a form afterwards with the amount of unemployment that I earned. When I looked at that form I told myself, haste makes waste Johnny Boy. You should have taken your time and thought things through and you would have realized you didn’t have all your information. Anyway, I’m not sure what to do about the fact that I left that off of my returns. I wonder what I should do, but I’m just not sure.”
“Well Johnny, you should really file an amended return to correct your mistake. Because you didn’t claim all of your income, if you don’t file an amended return you will in all probability receive a notice sometime in the future when the IRS computer systems match up the documents with the returns. Then they will charge you not only the tax due on the income but in all likelihood also a penalty and interest. You should file an amended return if you’re filing status, your income, your deductions, or your credits were incorrect. This, of course, applies in both the case where you owe more tax or if you are due a larger refund.”
“Well gee-wiz, I didn’t leave it off of the return on purpose. So I guess that means that I should pay the tax when I file the return?”
“That would be your best choice. If you file the amended return without the tax payment you will ultimately get a notice with the tax due as well as the penalty and interest. You’ll get a notice either way afterwards to charge you the penalty and interest. But the longer the tax remains unpaid the larger these numbers will get.”
“How do I file an amended return?”
“You can get a Form 1040X online at www.irs.gov and prepare it according to the instructions. If you owe tax because of the corrections you should try to send it with the return to minimize penalties and interest. If the IRS owes you money it’s important that you file your amended return within 3 years from the date of your original return or within 2 years from the date you paid the tax, whichever is later. And Johnny, be sure to review your state and local returns to see if you need to amend them as well.”
“Well, gee-wiz, now that I know what to do about this situation, I guess I better do that as soon as I can. It’s a good thing I ran into you today and we started talking. It’s always nice to talk to the good folks in this community. You’ve sure been helpful, thanks. I owe you a favor so I’ll return it right now by telling you that those cookies you’re looking at are also on sale for half that price at the Big GE.”
“Well, Johnny, I’ll just hold off on buying them until tomorrow then and head over to the check out now since we’ve actually walked up and down every aisle in the grocery store while we chatted. It’s been nice chatting with you. You have a good day now Johnny.”
“It’s been real nice talking to you too. You have yourself a good day, too.”
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