Oops! Forgot to report income in 2017 and 2018

[lucky penny]

While starting to gather info for my tax returns, I just discovered that my returns for the last two years omitted about $1500 in dividends from XOM, where I have a DRIP account. Don't know how I missed that since I got 1099s and I did report XOM income in earlier years (so I assume Turbotax prompted me to include it).

I guess I need to file amended returns ASAP for both years and pay the interest and penalty. The forms look like quite a hassle. I wish I could just do a rough calculation, mail a check to the IRS and state, and let them figure the exact amount. Anyone else have experience with this?

Yuck.

 

[38Chevy454]

Turbotax should be able to help you file the amended return and also calculate the extra amount due. Since it was an unintentional mistake, try including a note explaining that fact, just pay the interest due, and hopefuly the IRS takes it as paid in full. Especially since you are self-reporting, the IRS may waive the penalty portion. You seem to have a good chance at this, it has worked for me in the past when I made a mistake. Just paid the interest and they accepted it.

 

[pb4uski]

If you were in the 0% qualified dividends/long-term capital gains tax bracket in those years then you might not owe any additional tax... in which case you can just note it for your records and not sweat it.

Worst case, they will send you a bill if they think you owe them.

 

[sengsational]

The 1099-DIV went to the IRS from ExxonMobile and the IRS didn't send you a letter, so you're good. You might not have received a letter for 2018 yet, but they'd have sent you one for 2017 by now if they thought you owed them anything. I forgot some income once, and it was no big deal. The IRS sends you a bill and you pay it. ho-hum.

 

[COcheesehead]

I missed income one year. I just filed an amended return through TurboTax. Its actually pretty easy. Took me less than 20 minutes.

 

[NW-Bound]

I once forgot about interest on an I bond after I cashed it out. The IRS caught up with me 2 or 3 years later. Sent me a letter telling me to pay so much including interest. There was no penalty. I mailed in a check, and never heard from them again.

A few months later, received a letter from the state department of revenue asking me about this. The fed told them about my mistake. I sent the state a letter explaining that it was an interest from the US Treasury which was not taxed by the state. I then received a letter saying the matter was closed.

 

[rothlev]

Use tax software to compute the tax you owe. ( if you don't know how to do an x ) just add the missing income to the return . Compare the new balance to the old, and add 6% interest per year, Do the same for the state. Mail them a copy of the return as it should have looked like, you can print off a paper x if you want to.... The main thing is to pay ASAP, as the interest keeps computing. And they( especially the states ) are not timely about sending the letter with the additional interest owed. explain what happened in a cover letter, ie adding income of x due to taxpayer error. adding estimating interest owed of x, paying additional tax owed of x

 

[RunningBum]

I'd at least take a shot at 1040-X before deciding it's a hassle. I've had to file some amended returns for various reasons, and I recall it being pretty straightforward and not that much work using TurboTax.

 

[Bir48die]

I'd at least take a shot at 1040-X before deciding it's a hassle. I've had to file some amended returns for various reasons, and I recall it being pretty straightforward and not that much work using TurboTax.

Agree that amended returns are very simple. Just make sure you provide an explanation of what was omitted. Makes it easier for them to find

 

[lucky penny]

I'd at least take a shot at 1040-X before deciding it's a hassle. I've had to file some amended returns for various reasons, and I recall it being pretty straightforward and not that much work using TurboTax.

I finally gave this a shot and after much trial & error I did it!

After printing the instructions (found on Google) for using Turbotax to prepare an amended return, I logged on & got started. It wasn't easy! I managed to get through the first few steps: downloading the Desktop versions of TT for 2017 & 2018 (I had used the online versions), then downloading my tax files & creating duplicate copies of the original returns. Then I was stymied by the next step: "Inside your program [where] search for amend & then click the "Jump to" link" [never found this].

So I contacted TT by phone to ask for help. That wasn't so easy either since they obviously want you to find the answers online. When I finally got through, I got a recording about how they are "unusually busy" but if I leave a number they'd call back.

While I was waiting for the call, I kept working on it, restarting the program & trying to make sense of the instructions. Somehow, after a couple of hours everything clicked! I'm still not sure what I finally did right, or was doing wrong before, but I was just glad it worked.

It turns out I owe about $1200 to the IRS & NYS, which sounds about right. I'll print & mail the returns & checks & we'll see what happens. I'll probably have to pay a penalty but shouldn't be too bad.

What I learned from this experience is: (i) I really hope to avoid this in the future by getting it right the first time! & (ii) I'm proud of myself for making it work.

PS -- TT did call me back after several hours but I missed their call (they left a message referring me to their online help). By that time I was done. And FYI -- no extra charge by TT for amended returns. Good!

 

[COcheesehead]

I had to file an amended return using TurboTax and it took me 15 minutes. The links are right in the program and I have PDFs of all my past returns.