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I've discovered that I miscalculated the capital gains owed on a tax return that was completed 5+ years ago. I believe the limit on filing an amended return is 3 years, so what is the cheapest and most expeditious way to handle reporting this and paying what's owed? Are there any websites that do a good job of discussing issues like this? I'd do a search on this board/site but I have a feeling that trying to find information on this topic would be like looking for a needle in a haystack. Any tips?

-J8
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I've discovered that I miscalculated the capital gains owed on a tax return that was completed 5+ years ago. I believe the limit on filing an amended return is 3 years, so what is the cheapest and most expeditious way to handle reporting this and paying what's owed? Are there any websites that do a good job of discussing issues like this? I'd do a search on this board/site but I have a feeling that trying to find information on this topic would be like looking for a needle in a haystack. Any tips?

If you owe more tax, and it's a return from 5+ years ago, you may be "home free." It's beyond the usual open period for the IRS to make an adjustment.

However, if the error represents a significant portion of your reported income (I believe the magic number is 25%), your underreporting could be considered fraud, in which case the return is still "open." If this is the case, I would quickly find a tax professional with experience in handling these matters to determine how best to proceed.

Ira
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J8,

The 3 year limit is to obtain a refund. There is no limit on amending returns. If the mistake is minor then you do not need to amend the return. Unless the return is fraudulent the IRS is not able to go back more than 3 years. Probably everyone has made a mistake on their taxes.

Debra
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