Small Business Tax Tips - How to Get a $1,000 Refund For a Return You've Already Filed

Did you know you can get a refund for a return that you already filed? Yep, it's true. If you think you forgot a deduction on a previously filed return, you have three years to tell the IRS about it and receive a refund.

Here's how it works: You can file an amended return up to three years after the due date of the return in question.

So, for Year 2007 returns originally due April 15, 2008 -- you have until April 15, 2011 to file a correction. For Year 2006 returns originally due April 15, 2007 -- you have until April 15, 2010 to file a correction. And for Year 2005 returns originally due April 15, 2006 -- you have until April 15, 2009 to file a correction.

Now the question becomes: Is it worth it? I mean, do you really want to spend the time and energy doing more tax paperwork. I know, I know -- you've got better things to do with your time.

So here's an incentive to make it worth your time: If I offered you a little part-time job that paid about $180 per hour, would you be interested? I think so.

Well, that's how you should look at the task of filing an amended tax return. Do the math: You discover $1,200 of unreported deductions on your return from Year 2005, 2006 or 2007. So you do the research, prepare the proper forms (or have your accountant do it), and send them off to the IRS.

If you are in the 30% tax bracket (say, 25% federal plus 5% state), you will get a $360 refund for your efforts. And even if it took you 2.0 hours of paperwork drudgery, Uncle Sam just paid you a cool $180/hour. Not bad, eh?

To file an amended federal income tax return, use Form 1040X. Both Form 1040X and its instructions are available at the IRS website. You should also file an amended state return (assuming your state has an income tax), so check with your state's tax department to get the appropriate form.

Don't forget: if you're able to find $1,200 worth of unreported deductions on one previously filed return (resulting in tax savings of $360), there's a good chance the same situation exists for the other 2 "open" years.

End result: $360 x 3 = $1,080 in total tax savings.