I am wondering whether or not to file an amended tax return for 2007 and was concerned that it may cause a red flag.

The issue is that I have omitted some expenses on my schedule C that would have greatly increased my overall tax refund by over $1,500. Any advice would be helpful! Thanks in advance.

Generally speaking filing an amended tax return does not in itself cause a red flag. Clearly, the issue is what triggered the amended tax return, and if it an inadvertent omission of expenses or reportable income these amounts should clearly be reported on an amended tax return.

An amended tax return should be filed that includes the expenses that you excluded on the original tax return. However, it is important that you clearly state in detail the reason for the change in expenses. I recommend that you should file an amended tax return with each change on the tax return clearly explained. You should not be concerned about raising a Red Flag as filing amended tax returns is fairly common and unless there is a substantial change in the taxable income without a reasonable cause, the filing of the amended tax return in itself will not trigger an IRS audit.

If an income item was omitted on the original tax return, than the taxpayer should clearly report it on the amended tax return or else the IRS will eventually charge you with interest and penalties for not reporting all your income.

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