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Sweating This Year's Tax Return? The IRS Has 3 Years to Catch Up

Posted In:  taxes

It can be easy to get caught up in the last minute rush to file your taxes by April 15. That deadline creates panic in many households across the nation when it doesn't necessarily have to, though. If you understand the statute of limitations that the IRS works under, you could ease your tax worries without increasing your tax burden. The statute of limitations can work in your favor more often than not.

Take Your Time if You are Expecting a Refund

The IRS allows you to take 3 years to file your tax return if you are expecting a refund. If your tax filing deadline is April of 2011, you can file your return any time before April of 2014 and still receive your refund. When you get a refund, it means that you paid more than the amount of taxes you owed for the year. There is no reason for the IRS to demand that you file quickly. Those 3 years can also be used to file amendments or corrections to your tax report if you make a mistake.

IRS Auditors can Take up to 3 Years

When you file a tax return, the IRS must audit that return within the first 3 years. After those 3 years have expired, the only reason the IRS could conduct an audit is if you are suspected of tax fraud. Most states follow the same 3 year convention on auditing tax returns. If you file your return before April, the 3 years will be measured beginning in April. If you file later, the 3 years will be measured from the date that you actually file your taxes for that year. After the 3 years expire, the returns are no longer allowed to be audited.

Outstanding Tax Collection Allows 10 Years

The statute of limitations allows the IRS to collect any taxes or fees that are owed for 10 years after the amount owed has become finalized. These taxes include any money that you owe for your regular income tax, any money you may owe due to an assessment after an audit, or the finalized amount that is decided on after an assessment. After the 10 years expire, the amount that was due is removed from the records because the IRS has reached its 10 year statute of limitations on collecting those taxes and fees.

Making the Tax Laws Work for You

The easiest way to reduce stress over taxes is to file them as soon as you can. If you expect to receive a refund, it is in your best interest to do the paperwork so that you can receive your money sooner rather than later. You could use the statute of limitations to take care of tax problems in a creative manner, however. If you have a refund that has not been processed and you are within that 3 year window, you could apply the refund toward taxes that you owe at a later date. You could also choose to apply last year's refund to this year's estimated taxes.

Cheryl Johnson is a part-time writer who loves to help others save money. If you are interested in having Cheryl write for you, find her at under Cheryl24.



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