The feeling gets more intense with every new tax tip article you read and every conversation you overhear in which someone brags about their big refund-which you didn’t get. Or worse, you hear someone at a ball game grousing about his audit-and you start worrying that you might be next.
Relax. There’s no need to feel distraught or uncomfortable about tax returns you have filed. Did you know you may correct (or amend) a tax return for up to three years after you have filed it? You can look for tax credits you may have missed or add in deductions you forgot.
Why You Might Re-File Your Tax Return
Here are six reasons why you might want to re-file or amend your tax returns. Use the links to get to the forms you’ll need or for additional information:
1. Foreign Tax Credit. If you have investments in mutual funds, you usually pay some foreign taxes. You can get those back as an itemized deduction either on Schedule A or on Form 1116. You’ll probably want to read IRS Publication 514.
2. Alternative minimum tax (AMT). Taxpayers who are required to pay the alternative minimum tax one year may be able to get it back in a future year. Paying AMT generates an AMT credit that gets carried forward. Use Form 8801.
3. Retirement Savers Credit. Contributions to any retirement plan-such as a work 401(k), a personal IRA, or even a Roth IRA-will count toward the Retirement Savers Credit. Use Form 8880. A Retirement Savings Contributions Credit can be worth up to $2,000 on a joint return (or $1,000 for a single taxpayer).
4. Energy Property Credit. Nonbusiness Energy Property Credits disappeared in 2008, so many people didn’t realize they were back in 2009 on Form 5695. Worth up to $1,500 per residence, you get 30 percent of the cost of insulation, roofing, and special windows. (Also on Form 5695 are the 30 percent tax credits for installing solar power, wind power, and other alternative energy equipment. I doubt you overlooked that credit!)
Remember, when the IRS offers a tax credit, it’s quite possible your state does, too. Be sure to look for the corresponding tax credit on your state’s department of revenue forms. Or call your state tax department and ask.
5. Medical expenses for seniors. Did you know that some or all of the cost of senior assisted living probably qualifies for the medical expense deduction? Most people don’t move into assisted living facilities unless they need someone to ensure they are properly medicated, don’t harm themselves, or get ambulatory assistance. As a result, their housing expenses are apt to be less rent and more care-related.
6. Medical expenses for children. A child’s special school or tutoring designed to address physical or mental disabilities or nervous disorders might qualify as a medical expense deduction. When an education facility or special tutor is prescribed for medical reasons, you may use the cost first toward the Child and Dependent Care Credit (Form 2441). What’s left over may be deducted on Schedule A.
There may be many more tax benefits you’ve overlooked. Consider having a tax professional review your last three annual tax returns. You just might get some pleasant surprises!
Eva Rosenberg, EA, is the publisher of TaxMama.com®, where your tax questions are answered. She teaches tax professionals how to represent you when you have tax problems. She is the author of several books and e-books, including Small Business Taxes Made Easy. Follow her on Twitter: @TaxMama