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Amended 1040 how best to handle


artp

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Just had 1040 return e-filed and accepted yesterday with direct deposit of refund. Missed Fed W/H on 1099-R. Question is it better to wait to see if the original amount of refund hits client's bank account or file 1040-X right now.  Not sure if IRS will catch this before the refund gets processed. Client is aware of the situation. First time this has happened. Very embarrassing. 

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I don't know but I'll bet there are difference in opinions here. Personally, I would wait until the client has their refund and then file the amended return. If by chance the two returns happen to get processed it very well may screw things up. To me, this is the same thing as putting two tax returns in one envelope. That will definitely sink the ship.

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I wouldn't do anything because the IRS is pretty good of keeping track of what a taxpayer paid in.  On my own return I have forgotten to enter an estimate or extension payment, and within a month or so after filing I have gotten a check in the mail.  Same with clients who didn't remember if they paid their estimates.  The check will come well before the X is processed (12-16 weeks in recent years!).  If you must amend, don't do so until the original is processed as Terry suggested.  The missed withholding amount likely won't come with the original refund but will soon be issued in a separate check.

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Thanks for all the input. Does seem we have very different opinions on this, but I think I will get the amended return filed now. It will be several months in processing and if by chance the IRS catches the oversight and sends a check for the W/H before the amended return is processed, no harm, no foul. I understand we could possibly have a problem if IRS should double up and send a second payment but that could happen even if we wait till their refund hits their bank account.

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The IRS is very good at catching missed estimated payments because those are already posted to your account. Withholding, however, has to wait for all of your records to be posted to your account, and if matching notices are any indication, the earliest they seem to get around to them is November every year and even as late as the following year.

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I would prepare the amended return now.   If you want to tell them to wait until they get the first refund to mail it, that might be smart, or sound smart.  The client expects you to make it right.  I would not give them the idea that everything will be ok if I do nothing.   I wouldn't trust that opinion if I were the client.  Also, they are going to tell everyone in their life if they don't like how you handle this.  They will tell no one if they like how you handle it, but you don't need negative advertising. 

And we've all been there, you're doing great.

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