amended taxes 2004?

Question

2004 I had left off some stock sales that we lost money on and now I recieved a letter stating that we owe over 5,000. Does anyone know if it is too late to amend my taxes for 2004.
Thank you

Answer 1

No, it is not to late to amend 2004 taxes, especially since you got a notice (I'm guessing from the IRS) stating that you owe money. You should prepare a 1040X to correct the 2004 return and include it and corrected supporting schedules (1040, Schedule D) along with the notice that you received to show that you disagree with the notice. If you lost money on the stock sales you should actually end up with a refund instead of owing taxes. You should also file an amended state tax return as well (and include a copy of the federal amended return as support).

Answer 2

If the notice you received is a CP 2000 you don’t need to amend your return unless claiming the loss would cause you to pay less in taxes.
If there was no loss, but a profit instead or you are already carrying over a capital loss from prior years so, amending your return would only increase your loss to be carried over later. You would only need to respond to the CP 2000 and send a schedule D with the notice. If this is not the case and you can deduct you loss (up to $3,000) you should amend your return. If you just send the schedule D in with the CP 2000 notice, it will cause the proposed deficiency to disappear but it will not result in a refund.

A CP 2000 is not an exam or audit. It is just a notice that says that there was some income that wasn’t reported on your return that was reported by a 3rd party. If this really is you income this is the proposed tax. If this isn’t correct, show us what is correct. If this isn’t yours, prove it.

If this is an exam notice, respond to the examiner with the correct Schedule D.

Hope this helps

Answer 3

Yes you should amend your return. The notice you have received shows a re-computation of your income based on the premise that you had a basis (cost) of zero in the stock sold and that it was all short term capital gain. An amended return will show your basis in the stock and correct the IRS tax computation. If you failed to report the sales and had losses the good news is that not only will you not owe over $5,000 but you should be entitled to an additional refund.

Answer 4

The IRS only knows about the sale proceeds and not about your basis, so it looks to them like you made money even though you really lost money. The form you received from them will have instructions for correcting your return - don't just do an amendment and send it in separately or it will really confuse things now that you're in the CP-2000 form system. But redo your return showing your actual basis as it should have been shown originally, send it to them with the form within the time stated. Where it says to check on the form that you agree with their computation or not, check that you do NOT. Send them a copy of your original return and of your corrected one, and show an explanation of the difference. You could fill out a 1040X amended return, but if you do, send it with the rest of the packet, don't just file it separately. There's a number on the CP form to call if you aren't sure what to do.

This really won't be a big deal to them - happens to a lot of people - and you'll end up OK. If you lost money, you might even end up with a refund. It's kind of a shock to get a bill from the IRS for $5000, but if you really lost money on the sale, you won't owe and will come out OK, and it won't even really be a major hassle, just some paperwork to teach you to remember to file everything next time ;-}

Good luck.

Answer 5

I think you can go back 3 years, so assuming you mean tax year 2004 (as opposed to filed in 2004 for 2003), you should be good. I could be wrong on the 3 years, so you might even be all right in either case.

Answer 6

When you didn't report the stock sale, the IRS eventually found it and is assuming that your basis is zero, and all proceeds of the stock sale are taxable.

File Form 1040X, which will have Schedule D attached, showing your capital loss. You will get a refund instead of owing money.

You have until April 15, 2008 to file for the refund.

Answer 7

It is not too late to amend your tax return - you can amend your tax return upto three years.