Lumping overlooked tax deductions in with this year’s return is hardly an option.
Generally speaking, you cannot deduct expenses from a previous year on this year’s tax return. You can only deduct expenses in the year that you paid for them.
Each tax return reports finances for its own year and each of those years needs to be kept separate. Deductions, income or anything else from a previous year cannot be claimed with the current year’s tax information.
*Note: One of the exceptions to this rule is the tuition and fees deduction. This tax break allows you to claim qualified education expenses from the previous year as long as they were for school sessions that began in January-March of the tax year you are currently filing for.
File an amended return if you can
If you’re completely gung ho on finding a Plan B, we may have a solution for you. You can file an amended tax return if you discover a tax deduction you missed in a previous year. What’s the catch? It needs to be a completely legitimate expense. On top of that, it needs to be within the three-year time frame from the deadline date the original tax return was due.
To file an amended return, here’s what you should do: (more…)