1040x Question

[miatax]

Hi Everyone:

I rarely do 1040x's so this is my question. IRS has already assessed tax due with interest and penalties (client failed to file schedule D - so I am submitting those now - client will not owe / IRS will need to refund).

On the 1040x line item where it states amount due or IRS adjusted amount due, do I include the IRS penalties and interest or not?

IRS has already withheld future refunds from client. Does this go on the 1040x to or should I just enter the corrected amount due, IRS imposed amount (with or w/o penalties & interest) and then have them refund to the client the difference based on their calculations. I don't even know how much interest is incurred up to date.

Thanks!

[Pacun]

Do the 1040X as if the IRS has not audited the return. Just make sure you check where it states... are you amending because the IRS audited your return?... I usually include a cover letter to the auditor and I ask him if he accepts us 1040Xing the year in question.

[mcb39]

If the amended return is accepted, the penalties and interest will be refunded as well as the tax and interest will be paid. I had one of these a few years ago where the preparer had put the sale of an asset on the D as short term instead of long term which resulted in a large tax liability. After amending the return the following year, the client received approximately $6,000 in refunds. And, nobody needed it more than she did. Just caution your client that it will take some time (several months to process).