Hi,

I came to the US in Fall 04 and since then have been continuously on an F-1 student visa. I filed form 1040NR-EZ for 2004, but for 2005 I hired a CPA who (without informing me) filed a 1040 on my behalf. In there, he claimed an education credit (or something to that effect) which effectively lowered my tax, in fact I got all my tax for that year refunded. However, while filing my taxes this year on my own, I correctly picked up form 1040NR-EZ, in which there was a question asking me which form did I use for last year. That is when I went back to the papers that the guy had sent back to me from my last year's return and realized the mistake.

So in such a scenario, please advise what would be the best way to proceed. If I file a 1040X with the correct NR-EZ for last year, I would certainly owe some money. Do I just send them a check for that amount along with the forms. Also will there be any chances of a penalty of some sort? Should I proceed, irrespective of this, with my 2006 return on an NR-EZ?

Thanks.
Dee

Dee:

What happened to you happens to many in your situation. It comes from using tax professionals who have no experience dealing with tax returns for international students and foreign nationals. They do not know the rules, so they screw it up.

File the Form 1040X and attach a properly-prepared Form 1040NR-EZ to it. Write the word "AMENDED" on the top of the first page of the Form 1040NR-EZ.

Pay the tax shown on Form 1040X. Put a cover sheet on the amended tax return explaining what happened, and formally request that all penalties be waived. You MUST pay interest (required by law). If the IRS grants the waiver, they will bill you for the interest.

On your 2006 Form 1040NR-EZ question about last year's return, put "2006, Form 1040 (to be amended to Form 1040NR-EZ). Then file the return.

If you file the amendment first, then file the 2006 return and you have a refund coming, the IRS MAY deduct the interest from the refund. So if you need the refund badly, file the 2006 tax return first.

If you need my professional tax help, contact me at [email protected].

And also go back to the CPA that got it wrong and ask him to pay the interest. And to file the amended return.

TaxSearcher:

Good point, but I suspect Dee will not have any luck there!

Most good practitioners will correct an error (if it was clearly there fault).

My observation however is that most good practitioners will cover any penalty arising from their error. Some will also pick up the interest while others do not. The additional tax remains the clients responsibility.

Thanks for the answers. As for my plan of action: I am filing an amended return for 2005 along with 1040X. However, since (as suspected) calls to the CPA's office are not getting returned in this regard, I think I am going to write him a letter asking his response/explanation for why he filed it wrong and why is he not returning my calls and attach a copy of that letter with 1040X which asks for explaining the reason for amendment. I guess this would make my case more convincing that at least from my end there was no intention of any wrong doing and so may help in avoiding any penalties. As for the CPA, since the IRS would have all his information on my last returned (e-filed), they might figure out a way to deal with him, that is, if they want to deal with him.

Any suggestions?

Your CPA has no right to ignore you. He made an error plain and simple and should correct it. I would contact his office and not accept "no" for an answer. Tell them that you are going to file a complaint if you cannot get anyone to get back to you.

If you don't want to go through the CPA, then you can the amended return yourself and then write a letter to him documenting your situation and the error that was made and requesting that he cover penalties and interest.

DO NOT give up on this because you are clearly in the right and entitled to justice.

TaxSearcher is right! The CPA made a big mistake on your return. He probably has Error-and-Omission insurance to cover any charges he has to pay, so do not give up.


If you need my professional tax help, contact me at [email protected].