Amended Return

What is the name of your state? Alabama

1. My wife has been baby sitting for her sister and her sister has been paying her. She earned about $760. We thought that you had to earn over $1400 before you paid SS and Medicare. We put the amount under household employee instead of filling out a Schedule C and SE. We have already received our tax refund and cashed it. Then I caught the error when I was looking into how much to keep back for next years return because her income would be slightly larger than $1500. We are going to file an amended return 2003. I have filled out the 1040X and the Schedule C and SE. Do I need to send in more paper work than that to the IRS. Should I include any more forms? I will owe them $100 + interest/penalties.

2. Also, it looks like Alabama doesn't treat household employee income any differently than self imployment income when figuring taxes. Am I wrong in that? I have it listed under other income. If they do not, then do I need to file an amended return with them and include copies of the federal schedule SE and C.? I wouldn't be getting back a refund from them or paying in.

3. Also, I am not sure if I filled correctly for the years 2000,2001 as well. I might have made the same mistake in those years as well. My wife did not work in 2002, so I know that we filed that correctly, but would there be a cascade affect from 2000 if that return was filed wrong? Could that affect 2001, 2002, 2003 filings? Would I have to file an amended return for all of those years?

4. How far back can you amend your federal and state tax returns? How far back can the state and federal tax agencies look to audit you?

5. How much would I owe if I owed $100 from the 2000 tax year and $100 from the 2003 tax year?

6. I want to make sure I am clean and up to date, but I don't have a lot of money to pay a tax preparer for these amended returns. Can you help? Thank You!

[abezon]

1. Household employee applies to the people who employ people to work in their home. The employer pays 1/2 the employee's SE taxes on their personal return. It does not apply to someone who does child care in their own home or in multiple homes (babysitters). Your wife was self employed & should have filed a Sch. C & SE. Don't forget to take the expenses -- food, diapers, games, car miles for driving the little beasts to soccer practice, etc. Is your current setup that mom pays for the food & diapers & pays wife an extra $760? If so, change it to having wife buy everything & have mom pay a larger amount. Wife ends up with the same net income, but mom gets a larger child care credit. Shazam! Wife & mom just manufactured money out of thin air by a change in payment structure! Wasn't that cool? In fact, mom's child care credit should be more than wife's SE taxes, so mom can even reimburse wife for the SE tax in the spring & still come out ahead.

2. Again, household employee doesn't apply. Are you sure adding $760 to your AL income won't raise your state taxes?? Yoiu probably need to amend AL also.

3. 2000 is closed -- the IRS can't come after you for taxes now. You *can* amend 200 & earlier eyars, but they IRS can't come after you for them. I don't know about the state -- call H&R Block & ask what the statute of limitations is for AL taxes.

4. The IRS will send you a bill for any interest & penalties they want after they process your returns.

5. You might pay a pro to do one amendment so you can copy the style. This would save you money but still help you find every deduction soming to you. Remember -- if you're taking standard miles you do not need a daily mileage log. A map and some record of how many times you drove to a particular place is sufficient. EX: wife drives 2 miles to sis's house to get the kids = = 50 weeks x 5 days x 4 miles round trip = 1000 miles.