Questions on my first time having to file 1040X

[prototype]

While doing my 2016 tax returns. I noticed 2 minor ($ wise anyway, details below) errors on my 2015 tax returns e-filed almost a year ago. I just finished generating the amended returns on 2015 TT that corrected these 2 errors. I haven’t printed them out or mailed them yet.

Error 1. I “missed” the 1099INT so I failed to report ~$70 interest from my local small credit union savings/checking account.

Error 2. Messed up somehow on my “Foreign Taxes Paid” (~$50) so it ended up in Sched A instead of an actual tax credit which did me no good.

My 2015 Fed and State e-files (via TT Premium) were processed quickly last year and the small amounts I owed to each (~$150 Fed and $~$50 State) were deducted from my checking account on the dates I specified. I received no mail, email, or phone queries from the IRS (I was sort of surprised on this since a 1099 was involved).

As for FED and State amended returns – Feds owe me $13 and I owe my State $4. (if it wasn’t for the “missed 1099”, I wouldn’t even be bothering myself or the Fed/State workers with the time, printing, mailing hassle, data entry, processing for the small amount of $$’s involved). In 40+ years of tax filings this is my first time of ever having to deal with an amended return.

Questions:
1. My 2016 returns are ready for electronic filing and I have small refunds due both Federal and State. Should I E-file my returns now or wait until the 1040X is mailed in, processed, and posted (6 weeks or so)?

2. Should I add any notes, comments, explanations or highlight the changes manually on the 1040X printout to “help out” whoever’s desk this lands on and has to do the data entry, push buttons, approve things…whatever? Or just print and mail.

3. Does filing an amended return raise future/past audit risk or put one on some "watch list".? (I know I'm being a bit paranoid here, I've never been audited)

4. Any other advice, comments (except review your 2016 return more thoroughly before pushing the TT e-file button)?

Thank You

 

[pb4uski]

I would not bother with either. I would write a note to the file to document the errors and wait for them to bring it up. No real upside to amending and the amounts are minor.

 

[target2019]

With a missed 1099, you will get a letter at some time. All of the checking does not happen in real time, so that explains why you haven't heard from them yet.

If you add handwritten notes to the form, it won't be helpful. In a cover letter, expound on the form a little, if it is absolutely necessary.

They will answer this, but don't be surprised if it takes a while.

I filed a 1040X, and for more than a year after I continued to get notices that they had no filed 1040 from us to apply this 1040X to. I called twice and spoke to an IRS rep twice, and they could not explain this, as the forms were in their system. Evidently all IRS systems are not tied together in the best way.

I hope your situation goes much smoother.

 

[cathy63]

The foreign tax can go on either form and it's up to you to choose how to claim it, so it's not actually an error to put it on Schedule A, and you'll never get an inquiry from the IRS or your state about that one.

You may get an inquiry about the missing interest sometime in the the next two years.

When I made an error reporting the amounts on a corrected W-2, it took the IRS almost two years to notice and send us a letter. Of course at that time, they took the opportunity to look over our entire return, so they also assumed our 529 withdrawal was taxable and "helpfully" calculated the amount due and penalties owed. I ended up doing a 1040X and writing an explanation as to why the 529 was not taxable (i.e. our dependent child had qualified education expenses greater than the withdrawal and here's the 1098T to prove it.) The state never did question us about the error, but I filed an amended return with them as well. We ended up getting over $6K in refunds between the two and haven't heard another word.

If you have any other numbers on your return about which they might have thoughts or questions, I think it's best to go ahead and file the amended returns now so as to avoid having to respond later.

You can file your 2016 returns whenever you want. Nothing on the 1040X will change the data on the 2016 return. The $4 you pay to the state this year is deductible on your 2017 return.

You don't need to highlight the info on the 1040X. The form has 3 columns for original amount, net change, and new amount, so it's easy for them to find the rows that have a non-zero value in the middle column. There's also a text box in part 3 where you explain why you're filing a 1040X.

As far as I know, a tiny oversight like this doesn't raise your audit risk. We've never had any further contact after my error a few years ago.

 

[prototype]

Thanks for all the helpful info in your replies @cathy63 @target2019 @pb4uski.

I am tempted to do nothing and just wait given the small amount of $'s involved.

For now I think am going to go ahead and efile my 2016 returns next week after a final (and then final-final) review. And then revisit this later and probably mail in the amended 2015 return after I get my minuscule tax refund and hope it doesn't turn into a hundreds of hours of taxpayer and IRS/State Tax worker time in some sort of endless loop over a few dollars.

I wish I had never noticed this and could have just filed next week and moved on with no "tax worries" so to speak until (unless?) a formal IRS letter showed up.

 

[Texas Proud]

First, I assume that if you did nothing with the credit the tax would be a bit larger...


But, I would do nothing... wait until you get a letter and see if the amount they say you owe is within the ballpark of what you want to pay... if so, then pay it...


However, if you want to file the 1040X, what we used to do (when I did taxes a lifetime ago) was redo the whole tax return... then only pulled out the pages that had changes on them.... at the top we would write 'Original' or 'Amended'... this would match the 1040X page...


I would not wait to file the current year return... it has nothing to do with the current return since you are not talking about any carryover stuff...

 

[SecondCor521]

You already got good answers, but here are mine. I have filed two 1040X's over the past few years, and just noticed an error on my 2015 tax return that I have elected not to correct (the revised 1040X for me for 2015 would result in a small additional refund to me), so I'm an expert!

1. The *only* reason I would wait to file your 2016 forms is if a number changed on your 2015 1040X that feeds into your 2016 1040 and would affect it measurably. It doesn't sound like this is the case, though.

2. Just print and mail. Don't give the IRS explanations or additional paperwork unless they ask for it, and with a 1040X they don't ask for it.

3. No. As mentioned above, I've filed two 1040X's in the past few years and have never been audited.

4. None, except consider not worrying about being 100% precise. I used to try to be absolutely correct on my taxes, and I still fill them out as best I can. If I make a serious mistake, I figure they know where I live and we can probably work it out amicably over a cup of coffee. Heck, even multiple cabinet secretaries have gotten their taxes wrong, and some of them were even confirmed.

 

[OnTheBeach]

i would not amend the 2015 return but i would overpay your 2016 tax payable (to cover the prior year's error) and indicate on the 2016 return that you want to apply the over payment to 2017. So, when the IRS catches the issue, they will apply your over payment to the 2015 return instead of the 2017 return and you will avoid most of the interest and penalties.

 

[sengsational]

If you don't do the 1040-X, you will almost certainly get a bill in the mail. Although I've never done a 1040-X, I've gotten plenty of bills from the IRS when I forgot a 1099, and things like that. I just paid it, with penalties, and moved on with my life.

But since you have two changes, one against you and one for you, I would go ahead and file the 1040-X. I walked through creating a 1040-X using H&R Block tax software, and it only took a couple of minutes.

 

[jebmke]

1040-X is easy. Easier than doing a full return. I've done dozens of them. I'd be tempted to file one just to get the experience with small amounts so when another one with bigger stakes comes along you know how to do it. The software should walk you through all the steps and all you will send in is the 1040X and any form that is changed by the amendment (Schedule B and A for sure).

 

[scrabbler1]

I have filed 1040X returns for two friends over the years. The most recent time was last year when I left out the Qualified Dividends amount on my friend's return and the IRS assumed zero for it and ran the QDCG worksheet that way and billed my friend for ~$500 more. I completed 1040X and included an explanation with the missing QD amount (which the IRS could verify from 1099 forms) and reclaimed his original refund of $55 which he was applying to his 2016 taxes (so he wasn't waiting for a refund check). It took the IRS a month or 2 but they agreed with me and all is well. One minor annoyance while this was going on was the IRS kept sending my friend threatening letters asking for taxes and penalties due. I had to call the IRA and ask them to call off the dogs, which they did. (I was a third-party designee which enabled me the permission to speak with them on my friend's behalf.)


The time before that had some problems. My ladyfriend was completing her tax forms at the time and posted a wrong number which, even though subsequent numbers were correct, the IRA used for the rest of the return and reduced her refund by $500. Not knowing about 1040X at the time, it took awhile until we figured out we should file that form. Then, the IRS lost that form. We had to get our local member of congress involved (I have met her several times over the years and was familiar with her staff) and even her staffer lost what my LF sent her. But a month or so later (3 or 4 months in all) it all got straightened out. It was my experience with 1040X which pointed me to going there first when last year's incident occurred.


I also made a mistake on my friend's state return a few years ago. Actually, I had made 2 but the state caught one. I had to file an amended return using the state's amended figures so he could get about $180 back.

 

[RunningBum]

Do the 1040-X now. They will likely catch the missing 1099, and charge a penalty on that amount. Better to combine it with the other mistake which will offset the extra tax so that you have the + and - at the same time and probably no penalty or interest. It sounds totally unrelated to 2016 so no need to wait.


As far as audits go, it seems to me they would more likely audit someone they've caught in the past rather than someone who corrected their return, but no guarantee.


When I did my 1040-X a few years ago there was an "Explanation of Change" section where you tell them why you are sending them a 1040-X. Keep it short like, "Omitted a 1099-INT on the original filing, and (whatever your foreign tax credit error was)."

 

[RetireAge50]

I wouldn't do anything for a $13 and $4 error unless they follow up (which they won't).

 

[sengsational]

I wouldn't do anything for a $13 and $4 error unless they follow up (which they won't).

If they won't follow-up on small values, I guess we should all "forget" a $70 1099-INT every year

I just checked, and the smallest "IRS Bill" I've received was for $250 or so, so I can't provide a data point for anything less. In that case, they simply reduced my refund without ceremony. I just figured they've got their calculations and the computer spits out a bill. Maybe not for $1, but I was thinking probably would for $13. Maybe not?