filing extension and stimulus check (2024 Update)

You don't get a separate stimulus check, even if you file before April 18. If the IRS did not already send you a stimulus payment, you get the amount of the stimulus payment as a credit on your 2021 tax return. It's called the Recovery Rebate Credit. You can get the Recovery Rebate Credit on a tax return that you file on extension. It does not have to be filed by April 18.

Bob Sandler

I just helped a family member file a late return for 2020. We couldn't prove whether one of both economic impact payments were received, but we found a letter from the Treasury stating that the third payment was received. I ordered transcripts for the two years. Will this have the dates that checks were mailed or direct deposits were made? I'll have to dig up the bank statements.

I figured if we requested the full Recovery Rebate Credit as if neither payment had been received, IRS would write back with the dates they were issued, but if one was missing, this is the only way to deal with it.

Not exactly legitimate but I didn't have immediate access to old bank statements.

The transcript will only show the date the IRS issued the payment, not whether the payment was received. If the IRS believes it was issued, and you don't think it was recevied, you need to request a trace by filing Form 3911.

Ira Smilovitz, EA Leonia, NJ

Thanks for pointing that out.

We got the IRS transcript, and showed one payment, the amount of which makes no sense. We had to order replacement bank statements.

I knew I'd written about this.

She received a mysterious refund of her 2020 taxes a week ago. As the letter of explanation from IRS is mailed separately, that arrived today. The letter was dated November 14, so just under a year after the 2020 return was filed. Yes, it was a bit late.

As anticipated, the amount of the credit she took for the Recovery Rebate was knocked down to the difference between the rebate received and the full credit, so that made sense. But this means that none of her overpayment for 2020 was been applied to 2021.

She's got an overpayment for 2021 as well that was applied to 2022. Her

2021 tax return, filed on extension, hasn't yet been processed, and this means that she'll be charged interest and an estimated tax penalty on around $700.

As she'll receive a bill for the tax underpayment, if she objects to the penalty and interest, will IRS take the position that it can ignore the taxpayer's instruction to apply the prior year tax refund to taxes owed for the subsequent tax year, refusing to waive penalties and interest?

That sure took a long time. IRS sent a bill for underpayment of 2021 taxes today, and there's now no overpayment to apply to 2022. There's interest but no penality. However, IRS recalculated adjusted gross income and states that the wrong tax rate was used with qualified dividends.

Now, it would have been helpful if IRS fully explained how it recalculated the tax return in the bill, but they didn't. I ordered transcripts.

The Tax Return That Would Not Die

In our next installment,

After that bill was received, she responded by filing 2021 1040-X in January 2023. On the original 2021 1040, I reversed digits reporting her aggregate Social Security pension; IRS recalculated. She including a payment for remaining 2021 taxes.

Yesterday, four months after the 1040-X return was made, she received a correction letter from IRS. I couldn't figure out what IRS objected to. In comparing the amounts in the "correct" column with what I had prepared, they were the same.

IRS didn't like that in the "original" column I used amounts from the

1040 and not IRS's recalculation. Well, the instructions weren't very clear to me.

Aargh

It takes just as much time to figure out if an IRS letter requires a reply or if it doesn't.

She's still anticipating a bill for interest and perhaps penalty. She's going to take a position on Form 843 Claim for Refund and Request for Abatement that the interest must be abated because IRS took excess time to process her 2020 tax return and didn't follow her instructions to apply the refund to 2021 in lieu of sending her a check. The 2020 refund was large enough that there would have been sufficient excess to apply it to 2022 had IRS followed instructions.

At some point she'll be billed for interest and perhaps penalties for

2022 and she'll have to file a Form 843 for that as well.

IRS ignored the postmark date on the correspondence, instead noting the date they logged the letter into their system. This wasn't an issue of timeliness with respect to this correspondence, but it certainly could be for taxpayers sending correspondence close to a deadline.

She received two letters. One said tax information for 2021 was corrected but they'll take another 4 to 6 weeks to send the adjustment letter, and that no balance is due at this time.

The second letter said they needed another 60 days to reply, with generic language on what to do if there is a balance due.

Neither letter was helpful in any way. Generic language in the second letter contradicted generic language in the first letter. She still doesn't know if IRS has ultimately decided to abate interest. We think IRS isn't pursuing penalties.

The very same issue affects 2022 but she's had no bills for penalties and interest for that year. Because the issue affected taxes for multiple years, it was worth pursuing for 2021.

Good heavens. I filed the two letters and reviewed correspondence.

Form 843 Claim for Refund and Request for Abatement was dated May 23,

2023. She received a letter dated July 6 asking for another 60 days. She's now in a third 60-day cycle.

Does IRS get to request an indefinite number of 60-day extensions? Or is there a cutoff at which point the taxpayer's position will be sustained?

She is in receipt of a letter dated September 25, 2023, in which the interest on late payment of 2021 estimated taxes was abated. That means it took IRS four months before it processed her Form 843 Claim for Refund and Request for Abatement of Penalties and Interest.

She had applied her 2020 refund toward 2021 estimated taxes. It was larger than taxes owed for 2021 so she applied that refund toward estimated taxes for 2022.

Her 2020 tax return was processed after her 2021 tax return was submitted. She was billed for the 2021 tax underpayment, penalties, and interest. Penalties were eventually abated but there was still interest.

She paid taxes owed for 2022 with the return.

Thus far she hasn't been billed for penalties and interest on underpayment of estimated taxes. I'm hoping that IRS addressed the issue for 2022 in processing Form 843 for 2021.

At least this ends further correspondence for 2021.

I was wrong. There was still further correspondence.

She received a 1099-INT from IRS. I couldn't figure out what it was for. As I've explained, there were taxes owed for 2022 because a very large tax overpayment for 2020 was refunded in lieu of being applied to both

2021 and 2022. Due to the government shutdown, her 2020 tax return was processed after 2021 was received.

There were tax underpayment penalties and interest for 2021; thus far, there haven't been any assessed for 2022. IRS abated penalties but interest wasn't abated till I made the case that IRS hadn't followed her instructions to apply the 2020 tax overpayment to 2021 rather than refunding it.

The 1099-INT is for the credit given against improperly assessed interest! IRS is improperly characterzing this as income to her!