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Filing Time
Reminders For Freelancers by Julian Block  When tax time
rolls around, most filers receive refunds. Just because
you receive one, does not mean your return passed muster
with the IRS and you can forget about an audit. All it
means is that IRS computers have checked arithmetic and
other basic items. So make sure to file away those checks and other records that back up deductions and other items, as well as a copy of your return. Keep your records at least until the statute of limitations runs out for an audit - generally, three years after the filing deadline. But the IRS gets six years to check if you understate your income by 25 percent or more. And there is no time limit if the IRS shows you failed to file or you filed a fraudulent return. Despite what you
may have heard, the risk of an audit does not decrease by
filing late, rather than early. All income tax returns,
whether they are filed early or late, go through IRS
computers that scan them for arithmetic errors and single
out returns for audit on the basis of a top-secret
scoring system. High scorers, as well as some Form 1040s
chosen purely at random, are then scrutinized by the tax
collectors to determine which ones should actually be
examined. One important element in the selection process
is how the amount of your itemized deductions compares
with the total taken by others with comparable income
levels. Errors of fact or
judgment on your return for tax year 2001should not still
be causing you cold sweat. A recalculation on IRS Form
1040X usually takes very little time, plus whatever money
is involved if you feel you owe something. You can also
use Form 1040X if you now discover that you overpaid. For instance, you are not stuck if you take the standard deduction and later discover that itemizing for such expenditures as mortgage interest and real estate taxes would have been more advantageous. Use Form 1040X to amend your return and switch to itemizing, provided you do so within three years after the filing deadline for your return. If you get a
computer-generated notification of unreported income,
don't send a payment to the IRS without first checking on whether you actually omitted income. Every year, without fail, the IRS sends out many erroneous notifications concerning, for example, 1099 forms that reflect payments received by writers from publishers, interest from savings accounts and dividends from stocks. If you move or
otherwise change your address after filing your return,
it is advisable to notify the IRS. Use IRS Form 8822 (Change
of Address). Reporting thechange should ensure that you receive and are able to respond to mail the IRS later sends -- for instance, a bill for additional taxes or a notice that your return has been selected for an audit. Expecting a refund? Also notify the Post Office for your old address. This will help in forwarding your check to your new address (unless you authorized the IRS to directly deposit the refund into your checking account). All that Form 8822 asks you to provide is your old and new addresses, your full name and Social Security number, and, if you are a joint filer, your spouse's full name and Social Security number. Mail Form 8822 to the IRS Service Center that received your return, not the Service Center for your current address. IRS forms and
publications are available without charge by mail (call
800-TAX-FORM) by fax (call 703-368-9694) or download them
from the IRS Web site, www.irs.gov.
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