Irs Tax Problem – In Collections?
I have a problem with 2005 tax return. I did some stock tradings in 2005 which I didn’t include in tax filing, because I was not aware of it. Now IRS is asking me to pay $20,000 and they say now it’s with collections. I didn’t make any profit from stock trading, and I recently learnt that I would have to file schedule D. Is there any way I can file a correction to my 2005 tax return now including Schedule D and 1099 form from stock broker. Appreciate if anyone could let me know the procedure(because it’s already in collections)
If you OWE, the deadline for the 1040X is either 3 years from when you filed OR two years from when you were still paying the tax. Since you OWE, it’s still open for 2005, even after 4/15/2005.
You blew it for timing. You should have gotten the schedule D done when the IRS first sent you the CP2000. Now you’ll need to set up a payment plan for the 12+ weeks it will take to process the 1040x. (Any money that you don’t owe will be refunded, less the $105 set up fee.)
You can file an Amended Tax Return, Form 1040-X and add the stock transactions with the profit or loss properly recorded. Your tax bill will be adjusted.
You are still within the three year window until April 15 since it is three years past the due date of 4/15/06. And the window is only to claim a refund – there is no time limit to correct errors. So get a 1040-X for 2005 and send it in.
Do communicate with the IRS. Call whatever phone number is on the letters you have been getting and tell them you are correcting your 2005 to include the sales and to include your purchase costs which will greatly reduce or even eliminate what they are trying to collect. You can avoid things getting even worse by just talking with them and keeping them informed.
Get your tax man to re-file an amendment for you!