It feels like the tax code changes weekly sometimes. And in any business process, we know that errors are costly. So, let’s talk about what to do when you encounter business tax errors. Determine Which Business Tax Errors Need to be Corrected Math is a tricky subject – and tax code math is some of the trickiest math to do since every business decision and its financial outcome can affect your calculations. But before you start worrying about every single decimal point, a great first step once you realize you have business tax errors is to assess whether the error even needs to be corrected. “A broken clock is right twice a day.” “You used the wrong equation and got the right answer,” – these phrases are perfect for describing business tax errors versus your reportable tax liability. Big tax errors are going to affect your tax liability and – ultimately – your business. But not all errors need to be corrected. If you have math errors that don’t result in higher tax liability when corrected, you don’t need to correct them. But if your error ends up creating more tax liability for your business – those need to be corrected as soon as possible. And if there are many different business tax errors, you may have to file an amended business return to ensure that you and the IRS are on the same page when it comes to reporting your tax liability. Double-Check and Amend Your Tax Return Depending on your business structure, amending your tax return to account for business tax errors means filling out either a Form 1040-X (for sole proprietors and single-owner LLCs), Form 1120-X (for C corporations), or Form 1120-S (for S corporations). Amended tax returns can’t be sent electronically, they have to be completed on paper and then mailed out. Make sure you double-check your returns, even if you paid a professional service or CPA to prepare your business taxes for you. You can amend any of your tax returns up to three years after the original return was …
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