1040x: Fill & Download for Free

You can file amended returns with evidence supporting the capital losses. There is typically a limit, however. Only the last 3 years can be amended. If the losses occurred in an even earlier period, you will have to satisfy the IRS that they actually occurred, and the amount may be reduced by the amount that should have been claimed in those prior years ($3,000 per year against ordinary income).Three-year time limit. You usually have three years from the date you filed your original tax return to file Form 1040X to claim a refund. You can file it within two years from the date you paid the tax, if that date is later. That means the last day for most people to file a 2012 claim for a refund is April 18, 2016 (April 19 for taxpayers in Maine and Massachusetts). See the Form 1040X instructions for special rules that apply to some claims.

If you keep a log on spreadsheet or quick book with details of when, where, why, along with who, you don't need the receipt typically. It really depends on the tax auditor you get assigned to your case. If they want to be “hard ass”, they can disallow just about anything and you must provide original receipt with the name of the person you dined with and for what reason, etc. If it's an item, you must show why it was required for your business, what percentage use is for business and separate from personal (internet at home for example). Main point I'm trying to show is that it can be never ending if the auditor chose to do So. However, it cost them lot of money to send out an auditor and it's not worth while to come after small amount of money. It is also not worth their while if you have enough proof that if case goes to tax court and you would most likely win. Even if you're audited, majority of the time you will settle with percentage of the total deduction as penalty and tax owed (Example, You really owe IRS $50k if 100% of the deduction was disallowed but they'll take $15k by disallowing only 30% of the deduction). If you disagree with the auditor and you can prove why, you can go to tax court to defend yourself also.When I do amendment (1040x) for clients who forgets to deduct business expenses, credit card statement highlighted with amount and what business expenses it was for is sufficient enough to get refunds. IRS is understaffed as it is and they're not trying to go after you unless you give them a reason. What's really good about IRS is you can call them directly and ask them for the answer you're looking for free. If you're still not confident, call them at (800) 829-4933 for business and just change the last 4 digit to 1040 for personal tax. You will be surprised at how good their staff is at answering infrequent technical questions that most CPA struggles with.Just in case you're wondering about audit %. If you're w2 only employee, chance of audit is around 1%. If you're self employed, it goes up to around 3%. As long as you don't make any dumb mistakes or absurd deductions on the tax return, worst you'll get is a letter from IRS asking for proof.

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