I recently efiled a return and then discovered an overlooked 1099-DIV with a $2,500 dividend. By including this income, my refund is reduced by about $600.
Can I efile an amended return (1040X) or must i file a paper return?
Paper file only. Once you receive your original refund, you are probably safe to mail in the amendment and pay back the difference (the issue being, you don't want two different versions of your return going through the system in parallel).
-Mark Bole
Yeah, but this way he has to pay interest on the $600 from April 15 to whenever he files his amended return. At 5% a year, amended return filed in 3 months from April 15, we're looking at around $7.50 in interest. Do you know if the penalty (5% a month of the unpaid tax) would apply? I think the answer is no, because that penalty only applies if you didn't file a return and had unpaid tax.
To avoid any interest, he can pay with EFTPS or just send a 1040-V to the IRS. With either option, be sure to mention the tax year as 2008.
And there's the issue of state tax too...
The unpaid tax penalty (5%/month up to 25% max) does apply even if the return has been filed. In my (limited) experience, however, that penalty has been waived for amended returns.
The late payment penalty is .5% per month, not 5%, and it doesn't apply to amended returns or exam deficiencies until after assessment + x days (used to be 10 IIRC, not sure now). If the original return was filed late, additional assessments will also include late filing penalty.
As for OP, given that the original was an e-file I don't see any processing problem with getting the amended return in the mail by 4/15 with payment of the additional tax. That will avoid any interest on the additional tax. As for the state, OP should check their website. In MD you can file an amended state return electronically through the website.
-------------- Phil Marti, VITA Volunteer Clarksburg, MD
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