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:

1) Make sure that claiming this deduction will actually get you a sizable additional refund. Filing an amended return might not be worth the time and trouble.

2) File Form 1040X [Amended U.S. Individual Income Tax Return] for the tax year that you need to correct.

If you filed your original return with PriorTax, you can also file an amended return with us. If you didn’t originally file with us, it’s probably best to contact the service that prepared your original return.

3) Make sure you’re within the time limits. Generally when it comes to filing an amended return you have three years from the original due date of the return or two years after you paid any tax due, whichever is later. After this time the statute of limitations kicks in and you won’t be able to get an additional refund.

If you requested an extension and filed after the deadline, your three year time frame starts the date your return was filed.

There are some exceptions to these time limits. For example, if you are filing an amended return for a bad debt or worthless security you have seven years and if you are claiming or changing a foreign tax credit or a deduction for foreign taxes you have ten.

4) Print and mail your 1040X. Unfortunately, the IRS doesn’t allow you the ability to e-file an amended return so you’ll have to print it out and mail it to the IRS.

5) Wait. It will probably take 8-12 weeks for you to receive your refund check. Unfortunately, direct deposit is not an option with paper filing.

Still haven’t filed a return from a previous year at all? Not a problem. With PriorTax, you can file any return dating back to 2005.

Categories:

Tax Deductions and Credits

This entry was posted on Wednesday, October 26th, 2016 at 7:54 pm and is filed under Tax Deductions and Credits. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

11 Responses to “Can I Deduct Overlooked Expenses from Previous Years on This Year’s Taxes?”

Comments(11)

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Reply
Loren Kenion

Apr 9, 2017

Can I deduct 2016 expenses for my business if I didn’t receive ANY income until 2017? I had $5100 in expenses in 2016 and $5800 income in a lump sum January 2017. If I use the expenses in 2016 I will have a net loss of $5,100…

Reply
- admin
  
  May 16, 2017
  
  You can report business expenses if you were getting your company off of the ground. Keep in mind that if you report a business loss three consecutive years the IRS considers it a hobby. You are not able to report hobby income on your tax return.
  
  Reply
driver

Jan 4, 2018

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home business

Mar 22, 2018

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Reply
Raga

Apr 7, 2018

Here is my situation. I was in school all through 2016. I had job seeking expenses ( application fees, traveling expenses, Hotel stay expenses) then. Since I did not have any income on 2016 I did not include this in that years tax. Now I started earning in 2017. Can i use the expenses above mentined form 2016 for deductions this year.

Reply
Pam

Apr 12, 2018

I started a nursery business in 2017, only make 500.00$.
In 2014 I purchased plants to grow and use as mother plants to take cuttings off of them in the future.
I propagated these plants from the cuttings to sell in the future.
I lost a lot of plants due to bad weather and the list goes on.
Can I deduct the plants I purchased in 2014, I only got my license to sell last year?
I would be grateful for your reply.

Reply
Decor Business

Oct 30, 2018

I have a tax question and need some advice in moving forward.

I started a business in 2016 and spend 12000 in gathering items etc. it is registered as a sole proprietor. i haven’t generated any income in 2016 or 2017. despite leaving the country, i continue to advertise through online, i had a paid web page, my family gave out my business cards etc. this year, i generated $700 in income where the business is located.

i would like to know the steps i need to take to do my taxes properly regarding this. can i now file a claim with CRA in 2018 for my business and if so, what are the proper steps. please do assist me. i need an answer as soon as u can.

Reply
George Jempty

Dec 12, 2018

What if I incur the expense in Dec. 2018 but don’t get paid until sometime in 2019? Which year do I claim the deduction in that case? I would be entering into the contract in December, so maybe claiming in 2018 makes sense after all?

Reply
eBetterBooks

Dec 9, 2020

Amazing information about taxation, I would definitely recommend this blog to my friend. Thank you!

Reply