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Hi all,

A family member has discovered a mistake they made on the last few years of tax returns.

Basically this person does their annual return in sporadic chunks of time, via the Turbo tax software interview process. When asked to put in property taxes for their home and other properties, in addition to personal residence and vacant land, they were also entering in property taxes for a rental property they own. Then later in the process, when putting in rental expenses, they put the property taxes in there as well. Because they didn't do the whole tax process at once, they didn't really notice that they were entering that particular number twice by mistake.

Apparently this year the Turbotax interview or some kind of text in the area of the personal property tax section now says something like "Remember, if you have a vacation home and you are renting it out, don't put it here." This triggered the "duh" moment, and with a review of the past few years returns this person realized that they had basically been double-entering this property tax amount for a while.

This person is working on the current return and plans on entering the rental property taxes in the rental expenses and not in the personal property tax area, thus this year's return should be correctly done. S/he's asked me if I think this would trigger the IRS to look at previous years and find this problem.

Obviously it's the right thing to do to file the amended returns to fix the previous years mistake (and pay the additional tax that is thus owed), and I did recommend this, but I couldn't answer the question about how likely it would be that now only claiming the property tax once (probably something like a $3200 property tax bill) would trigger the IRS to look at previous returns, if s/he doesn't do the amended returns or waits a while to do them.

Is it likely that the fact that the property tax amount on personal property is reduced by something like $3200 this year would prompt an audit or other action?

How urgent is filing the amended returns? Is it something that should be done as quickly as possible? Can s/he wait a bit? It will be a fairly big bill just in terms of the additional taxes owed, and I don't know how interest/penalties would work in this scenario. Is there a big difference if s/he does the amended returns now versus waiting and seeing if the IRS reexamines these?

Thanks in advance for any info.
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