Tip of the Month for December 2001
Too Good To Be True? Yup!
Scam artists prey upon people’s unrealistic hopes (like the lottery? Sorry, I accidentally stumbled onto my soapbox). While there certainly are valid tax shelters, some which claim to be, are not. This means that, if you’re not careful, you can get into a real bind. Unfortunately, there are no hard and fast rules. So, we recommend that you ALWAYS verify something with your CPA or other qualified accounting professional before you make any drastic moves.
Watch out for things that sound like this: “Never pay taxes again!” “The IRS doesn’t want you to know about this!” “This is so new, your CPA doesn’t know about it yet.” Right.
Thinking of setting up a tax fraud scam? Watch your back. Any law-biding citizen can turn you in by calling the Tax Fraud Hotline: (800) 380-3495 Email: email@example.com Better to go get a real job (Darn, I slipped onto that soapbox again).
What? You’ve Not Sent Enough Money To the IRS?
The traditional method of fixing this problem has been letting the IRS assess the proper amount of tax, then tack on penalties and fees and send you a bill. But wait! Don’t look so glum! Help is here in Form 2210, "Underpayment of Estimated Tax by Individuals, Estates and Trusts" (PDF) and it even comes with instructions: IRS Instructions for Form 2210 (PDF) These remedies are more helpful for those whose income and expenses were not evenly distributed throughout the year, but take a look anyway.
Not a good word when used with IRS in the same sentence. But, if you have made an honest mistake on your return, you have up to three years to file an amended return. Be aware, though, that if you do file an amended return, it will get special scrutiny. The IRS employee goes and gets the original return and compares it yes, in detail with the amended return. Is it worth it? That’s for you to decide. To help you make a decision, you can get a copy of: IRS Form 1040X, "Amended U.S. Individual Income Tax Return." (PDF) It also comes with instructions: IRS Instructions for Form 1040X (PDF)