Amended Tax Returns and IRS Audits

We live in a high-performance culture. Year after year, in school and in the workplace, we are taught to build on our strengths, minimize weaknesses and strive for success.

This mindset usually means moving quickly to correct the human errors that inevitably occur.

When it comes to filing taxes, however, being overly quick to correct possible mistakes is not necessarily a good thing. In this post, we will discuss how amending your tax return can make a tax audit more likely.

To be sure, there are scenarios when a taxpayer really is required to amend.  But those scenarios essentially come down to one type of case: when a taxpayer knows that the original return contained falsehoods at the time it was filed.

It is quite a different matter, however, when a taxpayer realizes that he or she has made a mistake on a return that has already been filed. Yes, the IRS does encourage taxpayers to amend their returns after making such discoveries. 

But you should also realize that when you amend your return, you may also be increasing your chances of being audited. This is particularly true if the return seeks a tax refund.

In other words, a tax return doesn’t have to be perfect. It doesn’t make sense, for example, to file an amended return just because you think you may have made an inadvertent computational error. 

The IRS has the authority to fix any errors of that type on your return. And who knows, the revised calculations may even be in your favor.

Source: Forbes, “10 Tax Commandments . . . . To Keep IRS Away,” Robert W. Wood, September 26, 2013