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refund applied to 2019

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Hi guys!

I am amending a tax return. They received a refund on the original, but it was applied to next year. They owe money with the amended return. Do you think she should send a check for what is owed with the amended or can I write in the explanation to net it with what was applied from the original return? 

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Paying with the amended return is the quickest way to stop interest from accruing, so that alone is enough for me to choose that option.  Also, I think Murphy's Law will be in full force on the other option, and it won't be as easy as it sounds.  That said, I have no experience with trying to get IRS to shift a payment to a prior year, just a strong feeling that it won't go as smoothly as it should, and you'll be wasting time on it in the future.

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We just had a similar situation, with original return refund applied to 2019.  The amended return was sent in without payment, and with a request to lower the 2019 carry-forward.  The client immediately got a bill.  My partner called the IRS and was told that they cannot change the carry-forward amount.  That sounds bone-stupid to me (they HAVE the money already, after all), so it may be worth another call for us to see if we can get someone with a better clue to answer the call.  

My partner now has a far-better understanding of why I detest applying refunds to the next year.  One mess up (in this case, our elderly client misplaced a consolidated 1099 and since she was new - and newly widowed - we had no prior history to question her on), and now you have two years involved in the mess.

I'd just have the client pay it - and watch like a hawk, next year, to be certain the IRS doesn't lower the carry-forward anyway.

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I too have never had any luck in reducing a co to a amended return bill. Therefore I now have all amended returns pay up if balance due. I also have had issues where I asked for an amended refund be rolled and dang-it IRS sent check. Go figure.

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1 hour ago, Catherine said:

The client immediately got a bill.  My partner called the IRS and was told that they cannot change the carry-forward amount. 

So they can take the money when they correct the return but they can't take the money when the taxpayer amends the return? That sounds like an amazingly well thought out system essentially designed to generate interest for the government.

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1 hour ago, Roberts said:

That sounds like an amazingly well thought out system essentially designed to generate interest for the government.

I see I am not the only cynic amongst the crowds here...  lol.  Who's that Jeopardy game show host?  "Alex, I'll take the float for $8,000, please!"

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The carry forward payment is set iin stone.   There is one exception.  The IRS will offset it to past taxes due.

Payments made to past due years can be changed.  In one case the client had to lower their balance due to $50K, to meet the Streamlined Inst. Agreement requirement. A $20K payment was made with the instructions to apply it to a certain year.    The IRS applied it to a year that was about to expire.   We were able to  got that payment moved to an earlier year, which save the client $20K on theri tax bill.

 

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Have any of you had problems with client sending the payment with the amended return only to have it refunded later because they have nothing to pin it to?  Then get a bill for the amount due when they finally get around to posting the amended return?  These has happened several times for me, so much so that I don't have client send in the payment but rather have them wait till they get the bill.

I have even had a couple where the amended return shows a refund and instead my client got a bill.  Back when IRS would actually talk to you we were able to get it straightened out when the agent saw that a number had been dropped when they keyed in the amended information.  They made the correction on the spot and client did receive his refund.

Close to two years ago I did an amended were the client owed a little over 300.  Because of my past problems I suggested not sending in a payment and a few weeks later he received a refund check of over 6,000.  To this day we still have a descrepency, but I believe the client is going to pay just to get them off his back.  What a mess!  And the sad thing is the clients sometimes think it's on our end, but I rechecked everything and I was right, but again I believe a miss keyed figure was the blame.

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