5 Reasons to Amend a Previously Filed Tax Return

The most recent data from the IRS on individual tax returns indicates that of 131 million returns filed, about 5 million were expected to be amended. This comes to less than 4 percent, but that projection still affects a significant number of taxpayers. Filing an amended tax return can be a hassle that you definitely want to avoid if possible. But there are some situations where you’ll have to do so, and it’s prudent to seek out the help of a tax advisor who can guide you through the process. Here’s why you may need to file an amended tax return. 

1. You made a math or data entry mistake and didn’t realize it until after you submitted your tax return. 

For example, you added up your charitable deductions, and after filing your return, you realize you added them up incorrectly, and the difference was sizeable. Filing an amended return can correct that math error and get a refund.

Perhaps you were entering your gross income from your self-employed business into your software while it was late and you were tired, and you inadvertently transposed the numbers and entered the gross income as $78,000 when it was really $87,000. You will need an amended return to correct that error.

However, you would not usually amend a return if you incorrectly entered W-2 income since the IRS receives a copy of the W-2 and will compare it with what you reported and if there was an error, they will automatically make a correction and send you a bill or a refund as the case might be. The IRS website instructs taxpayers not to amend a return in such a situation.

The statute of limitations for refunds is three years for the due date the tax return and if the IRS has not automatically made the correction and you have a refund coming don’t let the statute of limitations expire before filing an amended return. That holds true for any situation were an amended return will result in a refund.

2. You used an incorrect filing status.

Single parents, caregivers of elderly parents, and recently married or divorced people often make the mistake of using “Single” status when it’s the wrong one. “Heads of Household” miss out on crucial tax benefits, while married people will generally need to use “Married Filing Separately” if they don’t wish to file a joint return with their spouse. Because filing status affects so many elements of your tax return, you need to file an amended return to pay additional taxes you owe or receive a refund once the correct one is used. 

3. You didn’t realize that there was a tax benefit you qualified for, and you’d like to claim it now.

There are many frequently overlooked tax benefits a tax professional would be aware of that the average DIY person wouldn’t, such as the ability for most individuals and small business owners to make pension and profit-sharing contributions in a new year before the tax-filing deadline and still have it count for the current filing season. 

This also works in reverse in that people accidentally claim benefits they weren’t actually entitled to. Often, the best way to know for sure is to consult a tax professional. 

4. You had investing activities that affect your tax return. 

Typically, you don’t realize a capital gain or loss until you actually sell an asset. But if securities become worthless, this results in a capital loss that needs to be reported the year it was deemed worthless, and not the year you discovered the fact. If this security was deemed worthless a long time ago, you may have to amend prior year returns to account for the capital loss.

This can be significant since you are limited to deducting $3,000 in capital losses from all of your other income and result in capital loss carryovers that last several years. If you have any other investment losses that were forgotten or miscalculated on your original tax return, filing an amended return is the next logical stop to ensure your carryovers are done correctly for future tax returns. 

5. You received tax forms after filing your tax return. 

If you were due a W-2 or 1099 form, you might not receive it when you’re initially preparing your taxes. It could be a surprise corrected form or the payer was just late sending it to you. But if you already filed your tax return, then got additional forms later on, amending your tax return becomes inevitable. 

Amending your tax return can be a cumbersome process, especially if you’re self-employed and/or have a great deal of investing activity. Asking a tax professional to assist you with filing amended returns can eliminate the headaches that come with the process. Many even offer a free review of self-prepared returns and ask the right questions to determine if it’s worth it to amend this year’s return and any prior years’. You may also have to amend your state tax return(s), which can grow more complex if your residency is or was multistate.


Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goals at Isler Northwest is to earn our clients trust as their primary business and financial advisors.

Isler Northwest

(503) 224-5321

1300 SW 5th Avenue
Suite 2900
Portland, Oregon 97201

Day Care Providers Enjoy Special Tax Benefits

Article Highlights: 

  • Business Use of Home
  • Prorated Use
  • Owned Home
  • Rented Home
  • Exclusive Use
  • Meal Allowance
  • Other Deductions

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Hardship Exemption Rules for Not Having Health Insurance Eased

Article Highlights:

  • Shared Responsibility Payment
  • Executive Order
  • Hardship Exemption
  • Exemption Certification Number

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Disabled Taxpayer Tax Benefits 

Article Highlights:

 Increased Standard Deduction

  • Tax-Exempt Income
  • Impairment-Related Work Expenses
  • Financially Disabled
  • Earned Income Tax Credit
  • Child or Dependent Care Credit
  • Special Medical Deductions
  • Qualified Medicaid Waiver Payments
  • ABLE Accounts

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Understanding Tax-Deferred Investing

Article Highlights:

  • Income Deferral
  • Earnings Deferral
  • Individual Retirement Accounts
  • Retirement Accounts
  • Bank Savings
  • Short- and Long-Term Capital Gains
  • Education Savings Accounts
  • Health Savings Accounts

When you are attempting to save money for your children’s future education or your retirement, you may do so in a number of ways, including investing in the stock market, buying real estate for income and appreciation, or simply putting money away in education savings accounts or retirement plans.

Knowing how these various savings vehicles are taxed is important for choosing the ones best suited to your particular circumstances. Let’s begin by examining the tax nuances of IRA accounts.

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Not Using QuickBooks Online? What You’re Missing Out On

If you dread every minute of the time you spend on accounting, you should know how QuickBooks Online can change your outlook.

 How long would it take you to determine:

  • What your total expenses for this quarter are?
  • Whether or not your business is profitable as of today?
  • How much you’ve sold every month this year?
  • Which invoices are overdue?

If you’re using QuickBooks Online, you can get answers to all those questions—and more—in the time it takes you to sign on to the website.

That’s not an exaggeration. The first thing QuickBooks Online displays is what’s called its Dashboard. This is the site’s home page, which contains an array of charts and account balances that provide a quick overview of your finances. Click on an element here—say, a checking account balance—and you’ll be able to drill down and see the details behind it (in this case, an online account register). Click on the Expense graph, and a transaction report opens.

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SALT Deduction – Battle Lines Have Been Set and Swords Have Been Drawn

Article Highlights:

• SALT Tax Limits
• State Work-arounds
• Converting Tax Deductions to Charitable Contributions
• IRS Regulations
• Taxpayer Beware

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ev car charging

Oregon Supreme Court approves tax to fund state EV rebates

Original Article by Catherine Morehouse

Oregon Supreme Court approves tax to fund state EV rebates

  • The Oregon Supreme Court approved the use of a privilege tax to fund the state’s Clean Vehicle Rebate Program on Sunday, after AAA Oregon/Idaho and Trucking Associations Inc. challenged the tax in November 2017, saying it violated Oregon’s Constitution.
  • The program is integral to Democratic Gov. Kate Brown’s 2017 initiativeto address greenhouse gases and climate change. One of the goals of the initiative is to have 50,000 or more registered and operating electric vehicles (EVs) in the state by 2020, according to Oregon Department of Environmental Quality (DEQ) air quality planner Rachel Sakata.
  • The clean vehicle program offers both a standard rebate option and a “charge ahead” option for qualifying low-to-middle income (LMI) customers. The standard rebate is $2500 towards a purchase or lease of a new EV with a battery capacity of 10 KWh or more, and $1500 with a battery capacity of less than 10 KWh. Charge-ahead rebates are worth $2500-$5000.

Read more

Kiddie Tax No Longer Based on Parents’ Tax Rate

Article Highlights:

  • Parents Attempting to Shift Income to Children
  • Kiddie Tax
  • Tax Reform Changes
  • Tax on Child’s Unearned Income
  • Tax on Child’s Earned Income

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Offer in Compromise

Offer in Compromise

Offer in Compromise FAQs

We’re all responsible for paying our fair share of taxes each year. But what happens when the amount that you owe is simply out of reach? What happens if you failed to make payments in a timely manner and your financial circumstances have shifted to the point where your cumulative debt is beyond your ability to pay? In the face of this untenable position, your best option for paying the IRS may be what is known as an Offer in Compromise.

The Goal of the Offer in Compromise

The Offer in Compromise, or OIC, was created to accomplish two goals: it allows American taxpayers who are unable to pay the full amount of their tax debt a way to negotiate a payment that is in keeping with their ability to pay, while at the same time providing the IRS with the ability to collect at least a portion of the amount that is owed to them. The process is neither simple nor fast: it generally takes at least one to two years for both sides to come to an agreement on an amount to be paid.

Even so, it has certain advantages for both sides.

An Offer in Compromise generally allows for resolution to be accomplished outside of court, with the agreed-to payment reflective of income and assets rather than the actual amount of debt that has accrued. Though it may seem a loss for the IRS, the agency ends up recovering more as a result of settling than they are likely to through a strong-arm collection process.

Understanding the Available Offer in Compromise Options

Taxpayers interested in pursuing an Offer in Compromise generally have three different options available to them under federal law. They are to suggest that they do not actually owe the tax debt that they are being charged with; to indicate that there simply are not enough assets or income to make a payment on the debt that has accrued; or to pursue a compromise based on either exceptional circumstances or economic hardship. This last option falls under the category of “effective tax administration,” and is notable because the taxpayer makes no argument as to either their ability to pay or whether they, in fact, owe the named amount.

Applying for an Offer in Compromise

The OIC process is both time-consuming and complicated. Applications require specific forms as well as extensive documentation, and all must be accurately prepared in keeping with IRS regulations. When mistakes are made or forms are incomplete the applications are quickly returned without the benefit of a review. To minimize both delay and frustration, it is strongly suggested that taxpayers looking to avail themselves of an OIC employ tax professionals for both the preparation of their paperwork and the negotiation of its terms.

Not Every OIC Application is Approved

It is also important to remember that an application for an OIC by no means guarantees the desired outcome. Submitting the specifics of your situation to a qualified tax professional will provide you with the ability to have your case reviewed by an expert who understands the process and the IRS criteria for approval, and who will be able to give you a reasoned perspective on the viability of your request.

Working with a professional will also provide you with reasonable expectations regarding the amount of time that the process will take and what your chances are of having your initial offer accepted. The program generally takes about two years from start to finish, and it is common for the IRS to make a counteroffer when the agency believes it will be able to collect more than the amount proffered by the applicant.

In evaluating your case, the Internal Revenue Service will likely pay less attention to the actual amount that is owed than the amount that the taxpayer is able to pay. This determination will be made on the basis of numerous factors, including income, assets, previous earnings capacity and anticipation of your earnings capacity in the future. Living expenses will also be taken into consideration.

The good news is that from the time that an application is sent in and while an IRS evaluation is taking place, most collection efforts are frozen. This generally provides tremendous relief from stress for taxpayers who have fallen behind in their payments and who feel unable to submit the amount that they owe.

If you have found yourself in this situation, contact us today to discuss your options. An experienced and knowledgeable tax expert will help you to understand, anticipate, and prepare for all aspects of the Offer in Compromise process, and will act as your advocate during sensitive negotiations.


Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goals at Isler Northwest is to earn our clients trust as their primary business and financial advisors.

Isler Northwest

(503) 224-5321

1300 SW 5th Avenue
Suite 2900
Portland, Oregon 97201