Published on 19/10/2020
Understanding Form 3115
Form 3115 is an application for change in business Accounting methods. This form can either change the entire accounting method of a business or itemized changes in accounting. The form is available with the IRS; you can fill it anytime you want changes in your accounting mechanism. The IRS will go through your form and application and approve to proceed further with the changes. The IRS must be kept in the loop of these changes at all times.
Businesses could be engaged in one of three types of accounting methods that they seek to change. These are:
- Cash-based accounting: All the transactions are done in cash. All income received is manually recorded in addition to the expenses made. Smaller businesses generally use Cash-based accounting; however, it is a method prone to mistakes and is not 100% accurate.
- Accrual accounting: This is a complicated accounting method. It records both income and expenses simultaneously. Most businesses, be it small or big, try to opt for accrual accounting since it is highly accurate, and more advanced than its counterparts. The method is also mechanized to deal with double-entry bookkeeping and long-term liabilities.
- Modified cash-based accounting: This is a hybrid between cash-based accounting and accrual accounting. It uses the techniques of both the methods, modified cash-based accounting records, and short-term and long-term items.
Everyone is eligible to file Form 3115
Anyone from an individual to a corporation, small business, and even foreign corporations can file a Form 3115. The idea is that anyone who has an income and expenses can exercise this. Insurance companies and even cooperatives can also file this form.
Personal details to be filled in Form 3115
Name, Address, ID number, contact number, and necessary accounting details are filled in the form. Additionally, you may also be asked to fill tax year information, mention the type of applicant you are, and insert a signature. If you have a business, detailed information may be taken as well. To verify the details filled, you will also have to attach a few documents supporting the details supplied by you.
Look out for changes in the guidelines.
Rules, regulations, and guidelines can get updated every once in a while. Ensure that you take a look at any updates in these guidelines before filling out the Form 3115 so that you don’t miss out on any new step or protocol as mentioned by the IRS on their website.
Use the Tax ID number in the form.
When you fill the Form 3115, you will be asked for an ID number at various steps. Please note that you should fill in the Individual Taxpayer Identification Number (ITIN) at these points. It is a unique ID number allocated to every taxpayer in the country.
Get your tax preparer to sign your form.
Although you can get done with the process on your own, you can anyway get the help of a Tax Preparer or hire a professional agency to do the work for you. In such a case, make sure that your tax preparer signs your Form 3115. He/she will also be required to fill in their Preparer Tax Identification Number (PTIN) while signing it. Additionally, keep in mind that both the parties (you and the tax preparer) need to sign the form. However, pay careful attention and do not sign a blank return.
Filer the next day of the year of change
Ideally, you should fill and submit the form a day after the year of change. While there is no such deadline for you to fill the form, it is recommended that you file the Form 3115 at the earliest. The earlier you fill the form and submit it, you will get more time to rectify any mistakes and solve them at the earliest.
Making changes to your Form 3115
If you think that the details you filled in the form are inaccurate or have been put by mistake, you always have the option of rectifying the error and making amends to the form. However, making amends to the Form 3115 is more complicated than filling a new Form 3115. Hence, it is recommended that you take the help of a professional agency like MyTaxFiler.
Filling out the Form 3115 is an easy process that you can smoothly sail through with little or no help. But if you make even one mistake, it can take a lot of effort to clean the mess. Not to mention, sending the Form 3115 after filling it can be quite a task. MyTaxFiler can help you cut the hassle down and get it done in almost no time.
