Q: I have just now realized that I have made a mistake on my tax return for 2009. What can or should I do to correct the discrepancy?
A: If the mistake is a simple mathematical calculation, the IRS will usually make the correction during the processing of the return whether the mistake is in your favor or not. On the other hand, if the mistake results in a substantial omission or from missing a credit or deduction, it is more appropriate to file an amended tax return. Amended tax returns are filed on Form 1040X.
Q: So far, we haven’t heard much on the estate tax or its return. Is there any news on the state of the estate tax?
A: Unfortunately, no. Congress, thus far, has failed to act in any meaningful manner regarding the estate tax. As a result the future of the estate tax, and whether the estate tax will be retroactive to the beginning of 2010 is still uncertain. As a result, any estate going to probate this year could be held liable for potential estate taxes.
Q: I have paid personal expenses from my company accounts. Do I have to include this amount in my income?
A: The amount paid for personal amounts should be included as business income and because they are not business expenses, they should not be written off. Above all, it is highly recommended that personal expenses not be paid out of company accounts as it makes record keeping more difficult and also opens possible legal problems in the future in the event of a lawsuit.
By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors