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Adding explanations to a 1040
Old 03-24-2018, 12:30 PM   #1
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Adding explanations to a 1040

Background:
I've got a twist in my taxes after transitioning from COBRA to ACA mid-year.
ACA kept wanting more income doc, etc. to prove I was qualified. No problem. But it went kinda ssssllllloooooww. The ACA enrollment confirmation went 3 weeks into the next month and I ended up paying 1 month of full-priced COBRA overlapped with 1 month of subsidized ACA as I wasn't going to cancel COBRA until I knew I had replacement coverage.
I documented multiple calls with the healthcare.gov help line confirming ACA eligibility and following up with their documentation reviews.

The extra month of increased COBRA shows up in the former employers 1095-C.

The overlapped month causes the TaxAct software to reclaim the ACA subsidy for that month (capped at $600). I've already eaten that months COBRA costs that could have been avoided if ACA would have confirmed quicker, don't to cough up another $600 in subsidy clawback.

The question:
In days of yore, people would attach additional notes/documentation/explanations to the tax forms. I'm thinking of attaching documentation to my 1040 to explain why I'm documenting the 5 months of subsidized COBRA and not the 1 month of full-priced COBRA during the overlapped transition month.

Has anybody here appended additional doc to a 1040 in recent history
Any indication as to if it made it to your file or got filtered off because it didn't "fit" in the system?
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Old 03-24-2018, 01:49 PM   #2
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Not recent history. But 6-7 years ago. I had very high medical bills. Itemized. Based on my income, I knew, the medical bills would "raise a red flag, or spit out my tax return".
This continued for 3 years or so. I included a detailed explanation, and "pictures" of
therapist, doctors, therapy schools, business cards. Never got audited. I try to be pro-active. Not afraid of audits. Just, when they occur, it's usually 2 years after I filed. Hard to remember everything. So, much easier to document at the time.
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Old 03-24-2018, 01:50 PM   #3
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I was helping a young lady with her taxes and wrote a note right on the 1040. Not sure if it will help or not.
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Old 03-24-2018, 03:38 PM   #4
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Just send it in, no explanation. Human's don't read the return. If they do (tiny percentage chance) question the entry, it sounds like you've got all the documentation you need to resolve it. But the odds are you'll never hear a thing, so why waste time and effort?
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Old 03-24-2018, 04:08 PM   #5
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Quote:
Originally Posted by harley View Post
Just send it in, no explanation. Human's don't read the return. If they do (tiny percentage chance) question the entry, it sounds like you've got all the documentation you need to resolve it. But the odds are you'll never hear a thing, so why waste time and effort?
Gun shy on an audit. I had a nonsensical audit several years ago with an IRA roll over.

The story (skip if you don't like stories):
5 trips to the local IRS office, 5 rejections of the additional documentation the local IRS office said "this looks great... should resolve the issue".
The auditors wouldn't say what info they required and I could not reach the auditing area to clarify.
Despite responding immediately to every notice received, I got a notice they were going to seize all of our bank accounts the day before we were to travel across the country to a family wedding.

I begged help from a former CPA who pointed me to the tax payer advocate, who gave me a back door phone number to the area handling the audit. I called, answered 1 trivial question verbally, done!
I asked what documentation to send to prove the answer: "None, we're good".

All of that effort and stress, threats to seize our bank accounts resolved by verbally answering 'yes' to "did you rollover within 60 days?". We had rolled it over the same hour, the 2 institutions were in the same parking lot... walked the check from Wells Fargo across the parking lot to the other bank B. (Wells Fargo claimed it was the only way..... )

8 years later and I still have to warn my wife that I ordered tax forms so expect mail from the IRS. Else she panics.

I hate to lose $850 out of intimidation and fear of an audit. But it would be cheaper than the divorce if this triggers an audit, even if the audit resolves quickly.
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Old 03-24-2018, 04:48 PM   #6
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I have attached notes to my 1040 forms twice in my life. The first time was when I paid a third party for deductible property taxes and interest I showed on Schedule A. In the instructions (back then, at least), it said to include a note for that along with the third party's name and address. This occurred during the closing of my co-op apartment I bought in 1989 and I paid the seller for 2 days of his monthly maintenance because we closed 2 days before the end of the month.


The second time was back in 2008 when I received two 1099-R forms following the emptying out of my old 401k and ESOP (using NUA), some of it a direct rollover into an IRA. Different numbers from the two forms, sometimes the sum of several numbers, appeared in various places on the 1040 form and Schedule D. While the IRS probably would have been able to determine the same data, the statement (which might have been indicated in the instruction booklet) helped me put all the numbers in the right places on my return.
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Old 03-24-2018, 07:28 PM   #7
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I had a similar issue this year. in Feb, DW transitioned from ACA to Medicare. I tried, to get the Marketplace to cancel her coverage at the end of January. I called in early Jan when the person told me to call back on Jan 31st. They can only cancel on the day I call. ( I kow this is wrong but what could I do?) I called on Jan 31st. They told me I should have called before the 15th (duh?) So it became effective at the end of Feb. I called many times to straighten it out, each time the ACA person told be the previous person did it wrong. I'll fix it for you. And it wasn't! The end result is in Feb, DW had both Medicare and ACA subsidy. Since ACA reported it, and Medicare reported it, I claimed both. I figure trying to fix it after the fact would not work. It didn't work before. And claiming something different from ACA or Medicare would throw up an automatic red flag. If the US Gov reports it to be so, I will claim it. Let the various gov depts. work it out if I get audited!
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Old 03-24-2018, 09:52 PM   #8
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Quote:
Originally Posted by CRLLS View Post
I had a similar issue this year. in Feb, DW transitioned from ACA to Medicare. I tried, to get the Marketplace to cancel her coverage at the end of January. I called in early Jan when the person told me to call back on Jan 31st. They can only cancel on the day I call. ( I kow this is wrong but what could I do?) I called on Jan 31st. They told me I should have called before the 15th (duh?) So it became effective at the end of Feb. I called many times to straighten it out, each time the ACA person told be the previous person did it wrong. I'll fix it for you. And it wasn't! The end result is in Feb, DW had both Medicare and ACA subsidy. Since ACA reported it, and Medicare reported it, I claimed both. I figure trying to fix it after the fact would not work. It didn't work before. And claiming something different from ACA or Medicare would throw up an automatic red flag. If the US Gov reports it to be so, I will claim it. Let the various gov depts. work it out if I get audited!
Interesting issue. Will keep in mind when I eventually go from ACA to Medicare in a future Feb.
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Old 03-24-2018, 10:27 PM   #9
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You can write what you want to on the return , but realize that the only eyes on the return are keypunchers that just plug numbers into a computer. They don't know anything about what's written in the margins.

It is a shame taxes are so complicated in some circumstances.
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Old 03-25-2018, 08:46 AM   #10
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Quote:
Originally Posted by harley View Post
Just send it in, no explanation. Human's don't read the return. If they do (tiny percentage chance) question the entry, it sounds like you've got all the documentation you need to resolve it. But the odds are you'll never hear a thing, so why waste time and effort?
Agree with this approach. Be prepared with your documentation at time of filing.
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