Briefly Noted

    Taxing Mistakes: Amending Your Return

    Thought you were done with your taxes?

    Most individuals are finished for the year after April 15. However, the Pennsylvania Institute of Certified Public Accountants reminds taxpayers that you may need to file an amended return if you need to correct data or add missing information concerning your income, deductions, credits, or dependents. An amended return can also be used to change your filing status. If you are married and filing separately, you can amend your return to file jointly. However, you cannot switch from filing jointly to filing separately once the time for filing the return for either spouse has expired. What if you simply made a math error? If you make a simple addition or subtraction mistake, there’s no need to amend your return. The IRS says its computers will detect the error, adjust your return automatically, and notify you.

    To amend your return, use Form 1040X, Amended U.S. Individual Tax Return, to correct a previously filed Form 1040, 1040A or 1040EZ. Also, use this form to amend individual income tax returns submitted through TeleFile or e-file. However, you cannot e-file an amended return. You can obtain Form 1040X, and instructions for completing it, on the IRS Web site (

    Generally, Form 1040X must be filed within three years after the date you filed your original return or within two years after you paid the tax—whichever is later. A return filed early is considered to be filed on the due date.

    Taxpayers who are filing an amended return to claim a bad debt or worthless securities have seven years after the due date of the return for the year in which the debt or securities became worthless.

    Investor Mistakes: What They Admit To
      Admitted Making Mistake
    Holding a losing investment too long 47 35
    Waiting too long to sell a winner 43 28
    Allocating too much to one investment 32 23
    Buying a hot investment without doing any research 24 13
    Trading securities too often 12 5

    Source: Pennsylvania Institute of Certified Public Accountants.

    Investor Gender Gap: Women Make Fewer Mistakes (Or So They Say)

    Women make fewer investment mistakes than men, and make them less often—even though on average they tend to know less about investing and enjoy investing less than men. Those are among the findings of a survey of investors by Merrill Lynch Investment Managers.

    Men on average cited holding a losing investment too long as their most painful mistake, while the most painful mistake among women was failure to start investing early enough.

    The national poll examined the investment mistakes of 1,000 investors (divided evenly among men and women), as well as their related attitudes, beliefs and knowledge levels.

    More survey results can be found at

    Challenge: Where Will the Money Come From?

    Life expectancies are on the rise—an individual reaching age 65 can expect to live well into their 80s. However, rising health care costs and the uncertainty surrounding Social Security funding make retirement planning a critical concern for many Americans, according to the Calvert Group, a money management firm based in Washington D.C. To ensure a comfortable lifestyle during retirement, preparation and adequate savings are key.

    Where will the money come from? The chart below provides an overview of retirees’ typical income sources.

    Your Cash Sweep Account: What’s the Deal?

    Are excess cash balances in your brokerage account being automatically swept into a money market fund or a bank deposit account?

    If they are, according to the New York Stock Exchange’s “Informed Investor,” you need to ask a few questions to make sure you know what you are getting.

    Brokerage firms manage cash balances in customer accounts in varying ways. Some firms offer one or more money market mutual funds while others offer accounts deposited in an affiliated or third-party bank. Some firms offer both. At some brokerage firms, customers are offered a choice, while other firms direct funds at their own discretion.

    Brokerage firms are under no obligation to seek the highest rates prudently available when it comes to the cash in your sweep account. In fact, your firm may receive payments for introducing your cash sweep account to a bank.

    To fully protect your investment dollars, here are questions you should ask your broker according to the NYSE:

    • What choices are available for investment of my cash balances?
    • Are these introductory rates? If so, what are the longer-term rates?
    • Where can I obtain current information on available rates for bank and alternative short-term investments?
    • If my funds are being swept into a bank deposit account, whom do I call to gain access to these funds?
    • How long will it take to obtain my funds?
    • Can the brokerage firm move my cash balance from one investment to another without my consent?
    Source: The New York Stock Exchange.