Posted on December 13, 2006 at 16:54:15:
A small mistake on a tax return can have negative consequences if you don’t clear it up. Today’s computer-driven matches of income and tax records can trip up the most innocent taxpayer.
If you neglect to list a dividend or a stock sale that netted a small profit, you might figure the IRS would note the unreported income. But what if the stock sale resulted in a loss, one that might even save a few dollars in taxes? Does it pay to go through the hassle of amending?
Yes, say the experts. The IRS doesn’t know whether you made money on the sale or lost it. What they do know – what was reported – is that there was a sale and the proceeds were credited to your account. You’ll hear from them about the undeclared proceeds.
The smart option: amend your return, report the stock sale now, and don’t worry about hearing from the IRS later. Bonus: you’ll even get credit for the loss.