Made a tax mistake? How to set it straight
Q: I made a mistake on my 1040 form, which I've filed. One of my dividend amounts was underreported by several hundred dollars. But I've lost my original 1099 form. Should I go ahead and file an amended return now, or wait to get a copy of the 1099, which is from out of state? How much time do I have to file an amended return?
M.S., Los Angeles
A: You should call up the dividend provider and get the correct amount of the dividend, and then file an amended return as quickly as you can to avoid any interest and penalties, says a spokesman for the IRS.
Remember, the IRS can use computer programs to match up individual tax forms with 1099 information for all paid dividends and interest. Generally, you have three years in which to file an amended return from the time your return was filed, or two years from the time you paid your tax, whichever is later, according to J.K. Lasser's "Your Income Tax 2002."
Q: I am a college student. This past year I chose not to work, since I was taking classes full time. Instead, I lived off savings that I had accumulated when working the prior several years. I also lived at home. I worry because I didn't file any tax return for last year (2001), since I had no income. Did I do the right thing? Should I have filed anyway, just to show the IRS that I had no income?
A.D., New York
A: "It sounds like you did the right thing," says an information officer for the IRS. Assuming you have no income, or your interest or dividend income is negligible, you don't have to file.
But remember that scholarship money can be taxable, the IRS spokesman says. Assuming you didn't receive a scholarship, or you don't meet the minimum-income tests spelled out in the front of the 1040 tax booklet on filing requirements, then you are off the hook for tax year 2001.
Q: I notice that the [Work & Money] section frequently discusses socially responsible mutual funds. I would like to invest in such a fund. Is there a good source for learning more about these funds, such as a comprehensive website?
W.S., Queens, N.Y.
A: A number of websites carry information on socially responsible investing. Check out socialinvest.org; socialfunds.com; goodmoney.com; domini.com; calvert.com; parnasus.com; efund.com; paxworld.com; and amertrust.com.