Question

Your friend realized that he made an error on his tax return. The error caused him to underpay taxes by $800. The error was made 4 year ago. What would be your advice to your friend? What if the amount was $125? What if the amount was $10,000? The year is either 2013 or 2017 when file tax return.

Answer 1

Sometimes you may commit mistakes in filing IT returns. In case if you filed incorrect Return , you can correct your mistakes by filing revised return. However you can revise those returns which are filed within due date. So correct your errors, review your return carefully and properly and submit your revised return by paying outstanding taxes along with interest to avoid penalty.

The due date for filing revised return is one year from the end of relevant assessment year (or) before completion of assessment of particular financial year - whichever is earlier.

In the given case error came to notice after 4 years of committing error. So he cannot revise his return.

Therefore he has to pay penalty. Penalty is 0.5% per month or partial month to a maximum of 25%of oustanding amount ( here dues are $800 , $125, $10000). In case error occurred in 2013 then he has to pay penalty because its to late to revise his return. And in the second case if error occurred in 2017 then he can revise his return within limit period mentioned above correcting the errors.