Louis, the median sales price of an existing home in June 2020 was $295,300. But a $100,000 refinance could require $4,500 in costs - 4.5%.ДЄccording to the Federal Reserve Bank of St. ItвЂ™s usually on the lower end of that percentage range for bigger loans and higher for small loans.ДЇor instance, a $300,000 refinance might come with $6,000 in closing costs, just 2%. If the IRS thinks you owe penalties it will send you a notice, which you can either pay or contest.It typically costs between 2-5% of the amount youвЂ™re borrowing to cover the closing costs of your refinance. The IRS will compute the interest and send you a bill if you donвЂ™t include it. Interest is charged on any tax not paid by the due date of the original return, without regard to extensions. Even though you might be amending a return from two years ago, the due date for your original return and for payment has long passed. If your amended return shows you owe more tax than on your original return, you will owe additional interest and probably penalties too. Plus, note that an amended return that does not report a net increase in tax does not trigger any extension of the statute of limitations. Some people amend a return right before the statute expires. This narrow window can present planning opportunities. In fact, if your amended return shows an increase in tax, and you submit the amended return within 60 days before the three-year statute runs, the IRS has only 60 days after it receives the amended return to make an assessment. You might assume that filing an amended tax return would restart that three-year statute of limitations. Normally the IRS has three years to audit a tax return. As an alternative, you can apply all or part of your refund to your current yearвЂ™s tax.

If you file an amended return asking for considerable money back, the IRS may review the situation even more carefully. Amended returns are only filed on paper, so even if you filed your original return electronically, youвЂ™ll have to amend on paper.В If you are amending more than one tax return, prepare a separate 1040X for each return. Amended returns are prepared on Form 1040X, whether you previously filed Form 1040, 1040A or 1040EZ. If you want to amend, you must file a Form 1040XВ within three years from the date you filed your original return, or within two years from the date you paid the tax, whichever is later. You can't make only those corrections that get you money back, but not those that increase your tax liability. If you later find that you made a mistake or you receive a revised Form 1099 or K-1, the IRS says you shouldВ amend.В You are not under an affirmative obligation to file an amended tax return.В But you still may want to. You may end up having a dispute (or at least correspondence or discussions) about which of the вЂњoriginalвЂќ returns is valid, and whether an amended return actually functions as a superseding one.В Timing and proof of when you filed each one is important.Д«eyond this exception, you canВ fixВ mistakesВ only by amending your return. The IRS can become confused if you try this unusual procedure. It can be used to make an election that cannot be made on an amended return, or to make certain other changes.

In effect, the вЂњerrorsвЂќ of the first original return didnвЂ™t happen. If you file a вЂsupersedingвЂ™ return before the due date of the original return (including extensions), it can take the place of the originally filed return. However, there is an exception,В if you act quickly. Amend?В You usually canвЂ™t correct a tax return without amending it. The IRS may process your return without them, or will request them if needed.Д¬orrect vs. Similarly, you usually shouldnвЂ™t file an amended return if you discover you omitted a Form W-2, forgot to attach schedules, or other glitches of that sort.

Math errors are not a reason to file an amended return, since the IRS will correct math errors on your return. Perhaps you realized you made a mistake, forgotВ payment or Form W-2, or left off the income from a Form 1099 you found in the bottom of a drawer. If you are being audited, amending may also send the wrong signal, further jeopardizing your position. If so, you are probably safe in not filing an amendment. Ask yourself whether the return you filed was accurate to your best knowledge when you filed it. In fact, you can be prosecuted for failure to file (a misdemeanor) or for filing falsely (a felony). Should you? It depends.В You must file a tax return with the IRS each year if your income is over the requisite level. Can you amend your taxes if you forgot something or made a mistake? Sure.

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