February 2020 Q and A

QUESTION:

I made a major calculation error in favor of the IRS on last year’s tax return. Can I file an amended return?

ANSWER:

You can file an amended return for individual taxes if you make a mistake in either your favor or the IRS’s up to three years after the filing date (with extensions) for the tax year in question. To get the ball rolling, file a Form 1040X, Amended U.S. Individual Income Tax Return. State clearly the reason for your amended return. If your mistake was on a business tax return, there are various forms needed to amend tax returns. A tax professional can tell you more.

QUESTION:

I’m getting ready to prepare and file my 2019 tax return and heard I could open a traditional IRA this year and deduct contributions from last year’s income on my tax return. Is that true?

ANSWER:

Anyone with earned income can open a traditional or Roth IRA before the tax filing deadline and contribute up to $6,000 for 2019 ($7,000 if over age 50), but they must qualify by income to get a tax deduction on a traditional IRA. (You can’t deduct contributions to a Roth.) The deductibility phases out at different income levels depending on your filing status and whether you or your spouse has a qualified retirement plan at work.