Made A Mistake On My Federal Return. File An Amended Return ASAP, Or Wait ?

[ownyourfuture]

H&R Block deluxe + state
E-filed yesterday afternoon & both the Fed & state returns were accepted. *both still showing accepted as I type*

Identified the mistake & corrected it.
Researched & found directions on how to do an amended return with the H&R Block software. (1040X)

Browsed both H&R Block & TurboTax support forums & found conflicting answers to the question “I made a mistake on my taxes, should I file an amended return now, or wait ?



The following is from https://www.taxpayeradvocate.irs.gov/get-help/issues-errors/i-made-a-mistake-on-my-taxes/


What should I do?
After filing your tax return, you realize there was a mistake, but you haven’t received an IRS notice

If the due date for filing your tax return has passed, you can submit an amended tax return to correct most mistakes. You can’t electronically file an amended tax return. You must mail it to the IRS.
If you realize you made a mistake but the due date for filing hasn’t passed, don’t file an amended tax return. Instead, file another original tax return with your correct information.

The last 2 sentences in the paragraph above (which apply in this case) have me perplexed, especially the last one. Since the due date for filing is still over a month away, the last sentence makes it sound as if I could send in another ‘original tax return’ either via e-file, or mail a printed version ?

Wouldn't that set off alarms at the IRS ? Two different returns for the same Social Security # ?

 

[pb4uski]

How big a mistake and what was it?

 

[njhowie]

Why question the information provided on the IRS website? Do what it says. If alarms go off, just refer them to their website. Done.

The bigger question is if your tax software will let you file the original return again after it has notification that it was already accepted? It may only let you do an amended return.

 

[ownyourfuture]

How big a mistake and what was it?

I was afraid someone would ask that

The amount was $1400
The screwup occurred on the section titled
Let's see if you qualify for the Recovery Rebate Credit, where I was asked
"Did you get a third stimulus payment in 2021 (including any plus-up payments)?

I misunderstood that to mean I should've received 3 stimulus payments in 2021, instead of the 3 I've received in total since 2020.
So I chose 'no'.

This gave me a $1400 credit which I'm not entitled to.

 

[plsprius]

I think I might have this problem too, although in my case the minor mistake doesn’t change my tax amount due.

But, I looked at the 2021 instructions for 1040-X and found this (top of page 3):

“Don’t file more than one original return for the same year, even if you haven’t received your refund or haven’t heard from the IRS since you filed. Filing more than one original return for the same year, or sending in more than one copy of the same return (unless we ask you to do so), could delay your refund.”

Thus, it seems unwise to file another “original” return regardless of the first filing being before or after April 15th. I think I will just wait until I receive my refund and then file the amended return to correct the record…

 

[Jerry1]

I was afraid someone would ask that

The amount was $1400
The screwup occurred on the section titled
Let's see if you qualify for the Recovery Rebate Credit, where I was asked
"Did you get a third stimulus payment in 2021 (including any plus-up payments)?

I misunderstood that to mean I should've received 3 stimulus payments in 2021, instead of the 3 I've received in total since 2020.
So I chose 'no'.

This gave me a $1400 credit which I'm not entitled to.

In this scenario, I would not do anything. My belief is that they will catch the error. Of course that’s going to hold up your refund, but it should work itself out. I did exactly the same thing on my MIL’s return last year. Me and DW, who handles her mom’s finances, had a miscommunication about whether she received all the payments or not. I missed one, overstating the refund, and the IRS corrected it and sent the correct amount back.

Let it play out. You can always amend it next year after you give it time. The IRS is too screwed up right now to risk filing another return. Especially since you can’t file it electronically.

 

[Turbo29]

I messed up on my taxes too. Forgot to file Form 8889. As all of my HSA withdrawals were qualified medical expenses it won't change my tax liability.

According to the TurboTax questions and answers I should amend or else IRS will consider all HSA withdrawals to be taxable and will send me a notice requesting I pay taxes on them. Yet others say it's no big deal. When they send me the letter I just respond and send in the form 8889 then.

The whole thing is leaving me feeling very unsettled.

 

[njhowie]

I messed up on my taxes too. Forgot to file Form 8889. As all of my HSA withdrawals were qualified medical expenses it won't change my tax liability.

According to the TurboTax questions and answers I should amend or else IRS will consider all HSA withdrawals to be taxable and will send me a notice requesting I pay taxes on them. Yet others say it's no big deal. When they send me the letter I just respond and send in the form 8889 then.

The whole thing is leaving me feeling very unsettled.

I would file the amended return ASAP. It would be the 8889 and the 1040X page. There is a box for explanation and you'd simply indicate you forgot to include 8889 and that it doesn't affect any of the entries in the original filing. Simple and done.

I had a similar issue last year - realizing a day of two after filing that we forgot to identify DD's 529 withdrawals. Did the 1040X, explanation, and that was the end of it. Had I not filed the amended return, most likely nothing would have happened. I didn't want it hanging out there, or on the back of my mind, so I did it. Never heard about it again.

 

[grasshopper]

I was afraid someone would ask that

The amount was $1400
The screwup occurred on the section titled
Let's see if you qualify for the Recovery Rebate Credit, where I was asked
"Did you get a third stimulus payment in 2021 (including any plus-up payments)?

I misunderstood that to mean I should've received 3 stimulus payments in 2021, instead of the 3 I've received in total since 2020.
So I chose 'no'.

This gave me a $1400 credit which I'm not entitled to.

You are not alone I did this also. I logged on to IRS.gov a month later account transcript and it looks like they caught it. YMMV

 

[pb4uski]

I messed up on my taxes too. Forgot to file Form 8889. As all of my HSA withdrawals were qualified medical expenses it won't change my tax liability.

According to the TurboTax questions and answers I should amend or else IRS will consider all HSA withdrawals to be taxable and will send me a notice requesting I pay taxes on them. Yet others say it's no big deal. When they send me the letter I just respond and send in the form 8889 then.

The whole thing is leaving me feeling very unsettled.

This happened to me on my 2020 return. Since I knew all my HSA expenses were qualified and therefore my withdrawal was tax-free I didn't file the form.. never thought about it. Of course, the IRS had no way of knowing that the withdrawal was for qualified medical expenses and as a result was not taxable.

I was blissfully unaware until December 2021 when the IRS sent me the letter. I promptly prepared a 1040X with a Form 8889 and mailed it to them.

Luckily, I think they realize that this is a thing that can be easily overlooked because rather than send me a notice assuming that it was taxable and a bill for tax due, the notice was simply that "We received information from third parties such as employers or financial institutions that doesn't match the information you reported on your 2020 Form 1040." and that "You may need to file an amended 2020 Form 1040X". The flip side of the notice showed the details on the HSA distribution reported to them by Fidelity.

You could just wait for them to send you a letter and then file a 1040X and 8889.

 

[Jerry1]

You could just wait for them to send you a letter and then file a 1040X and 8889.

Pre COVID, I would have filed the amended return right away. Now, the IRS is such a mess, I would hold off and wait for them. You could even prepare the form now while everything is fresh in your mind and then wait until they get hold of you. IMHO, filing paperwork (hard copy) with the IRS right now is just throwing your amended return into a black hole.

 

[pb4uski]

^^^^ Yeah, I haven't heard anything back from them on the 1040X, but I only mailed it to them in Dec 2021.

 

[jebmke]

In this scenario, I would not do anything. My belief is that they will catch the error. Of course that’s going to hold up your refund, but it should work itself out. I did exactly the same thing on my MIL’s return last year. Me and DW, who handles her mom’s finances, had a miscommunication about whether she received all the payments or not. I missed one, overstating the refund, and the IRS corrected it and sent the correct amount back.

Let it play out. You can always amend it next year after you give it time. The IRS is too screwed up right now to risk filing another return. Especially since you can’t file it electronically.

I'd let it play out as well. In an odd way, if it is accepted and corrected by the IRS that is a good thing generally because it means that the reconciliation issues can be automatically corrected by them. For 2020 returns, many returns sat in manual work queues even though e-filed.

 

[cathy63]

I was afraid someone would ask that

The amount was $1400
The screwup occurred on the section titled
Let's see if you qualify for the Recovery Rebate Credit, where I was asked
"Did you get a third stimulus payment in 2021 (including any plus-up payments)?

I misunderstood that to mean I should've received 3 stimulus payments in 2021, instead of the 3 I've received in total since 2020.
So I chose 'no'.

This gave me a $1400 credit which I'm not entitled to.

I recommend against filing an amended return for this. We've dealt with it fairly often at my Tax-Aide site (we try very hard to get people to check with their bank before we file their return, but some are very sure they never got it, and then they come back with "well, I decided to check with the bank and ...").

What usually happens is that the IRS direct deposits the refund and withdraws the previous stimulus payment around the same time. Sometimes the withdrawal happens first, so make sure you have $1400 in your account. Sometimes they just subtract $1400 from the refund and do a single deposit. They will also send a letter with instructions on how to appeal their decision. I don't believe amending your return will make this process go any faster. The IRS knows whether or not they sent you a stimulus payment and it doesn't seem to be slowing down refunds much this year.

If the original stimulus was not direct deposited, or if you requested your tax refund to be a check, then they will hold up your refund until they've corresponded with you. In this case, filing an amended return might resolve it faster.

 

[cathy63]

I messed up on my taxes too. Forgot to file Form 8889. As all of my HSA withdrawals were qualified medical expenses it won't change my tax liability.

According to the TurboTax questions and answers I should amend or else IRS will consider all HSA withdrawals to be taxable and will send me a notice requesting I pay taxes on them. Yet others say it's no big deal. When they send me the letter I just respond and send in the form 8889 then.

The whole thing is leaving me feeling very unsettled.

You can choose to amend or not. I personally would file an amended return for myself or for my Tax-Aide clients in this situation. If you don't file an amended return, then if there's anything else on your tax return that's not 100% clear because you don't have to report it (like 529 withdrawals for qualified education expenses), they will make the interpretation that disadvantages you most and increase the taxes they say you owe. At that point you have to write a more complicated response and possibly do an amended return anyway, so it's better to do one now and head that off, especially if you can e-file it.

 

[jebmke]

I recommend against filing an amended return for this. We've dealt with it fairly often at my Tax-Aide site (we try very hard to get people to check with their bank before we file their return, but some are very sure they never got it, and then they come back with "well, I decided to check with the bank and ...").

What usually happens is that the IRS direct deposits the refund and withdraws the previous stimulus payment around the same time. Sometimes the withdrawal happens first, so make sure you have $1400 in your account. Sometimes they just subtract $1400 from the refund and do a single deposit. They will also send a letter with instructions on how to appeal their decision. I don't believe amending your return will make this process go any faster. The IRS knows whether or not they sent you a stimulus payment and it doesn't seem to be slowing down refunds much this year.

If the original stimulus was not direct deposited, or if you requested your tax refund to be a check, then they will hold up your refund until they've corresponded with you. In this case, filing an amended return might resolve it faster.

Can I interpret this to mean that the returns that don't reconcile EIP correctly are automatically adjusted in some way rather than suspended in manual review process?

 

[Jerry1]

Can I interpret this to mean that the returns that don't reconcile EIP correctly are automatically adjusted in some way rather than suspended in manual review process?

That was my experience last year with my MIL’s return.

 

[Turbo29]

Pre COVID, I would have filed the amended return right away. Now, the IRS is such a mess, I would hold off and wait for them. You could even prepare the form now while everything is fresh in your mind and then wait until they get hold of you. IMHO, filing paperwork (hard copy) with the IRS right now is just throwing your amended return into a black hole.

I was thinking that. They might not open the envelope and process it for months or years.

 

[jebmke]

I was thinking that. They might not open the envelope and process it for months or years.

Amended returns can be e-filed now.

 

[Turbo29]

Amended returns can be e-filed now.

I just found that out... and did it in <15min. Thanks!

 

[Turbo29]

You can choose to amend or not. I personally would file an amended return for myself or for my Tax-Aide clients in this situation. If you don't file an amended return, then if there's anything else on your tax return that's not 100% clear because you don't have to report it (like 529 withdrawals for qualified education expenses), they will make the interpretation that disadvantages you most and increase the taxes they say you owe. At that point you have to write a more complicated response and possibly do an amended return anyway, so it's better to do one now and head that off, especially if you can e-file it.

I went into TurboTax and found out I can amend online. So I amended and efiled. Took <15min.

My state (AZ) still requires mailed in amendment forms. As they go off the federal income the amendment form 140X shows no change whatsoever in anything. I don't know whether or not to even send it in. I suppose they could send me a bill for $0.00.

 

[Jerry1]

Amended returns can be e-filed now.

I just found that out... and did it in <15min. Thanks!

Good to know. Still, in the case of missing the stimulus payment, I'd hold off. On the case of not filing the form for the HSA withdraw, it might be okay go ahead and do the 1040X as long as it can be done electronically. Personally, I'd wait.

 

[Jerry1]

I went into TurboTax and found out I can amend online. So I amended and efiled. Took <15min.

Interesting. I wouldn't have thought you could amend before the due date (April 18th).

 

[Turbo29]

Interesting. I wouldn't have thought you could amend before the due date (April 18th).

Not only did they let me but I just now got the text from TurboTax saying that they had accepted the amended return.

I e-filed the original return last Sunday and had them debit my bank account for the huge amount I owed them (<$10) on Monday.

 

[ownyourfuture]

I'm the OP & want to thank you all for the input.
I'm going to include a detailed reply and at least a couple follow-up questions later this evening.

Please check back when time allows.