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File Amended Returns For Hidden Savings

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Article by Al Aiello, CPA, MA Taxation

In my former days of being in tax practice I literarily did hundreds of amended returns for refunds of past paid taxes because of missed deductions or strategies. Here were the results:

  • First off, NOT one got audited (they usually don’t).
  • Most of the taxpayers were real estate investors because real estate is where most of the tax savings are. Most real estate investors have the potential for cash refunds.
  • You can amend, not just for one year, but for three years so it could be three years worth of refunds (plus some interest).
  • For missed depreciation there is no statutory limit as to the years you can go back, so it could be many years worth of refunds.
  • Refunds are often large, sometimes astronomical (as high as $50,000 or even more) – like "found money" that you can reinvest for more income.

Some items for which you can file amendments for:

  • Depreciation on rental properties.
  • Other missed deductions such as tuitions for real estate courses, conferences and boot camps.
  • Depreciation on business equipment or automobile.
  • Other missed business expenses such as auto, leasing, travel, marketing, etc.
  • Any other deductions or business expenses for which you have back-up proof.
  • Tax overpayments, such as social security taxes that should not have been paid on passive income.

For amending returns individuals generally file IRS Form 1040X. Go for that found money.

Al Aiello is a regular guest speaker at CT REIA. Go here for the current list of upcoming real estate investing seminars in Connecticut.

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