On my 1040 for 2010 I forgot to include my state tax refund as income. I itemize my deductions, including state taxes.
I mailed in my return last Monday. If I mail the 1040x this Monday, do I need to include a check to cover the difference between the refund amount on the 1040, and the correct amount on the 1040x? Or will the IRS process the 1040x before they mail my refund?
If the refund amount is very small, under $25 say, I'd ignore it.
If the IRS wants to change your return, let them do the work.
Oherwise, fill the 1040X as if they actually have received and processed the original, and in fact, by the time the 1040X is looked at, that's probably the case.
I would recommend you WAIT to file the amended return. Amended returns get processed manually by a different unit at the IRS. If they start on your amended return before you original return makes it through the normal system they will NOT find an original return to post against. This will generate a notice and cause them to return the amended return to you as unprocessable.
Additionally, the error on your original return may get caught by the system. This will almost certainly generate a notice of correction. This is NO BIG DEAL and will simply say something like "we think we found an error and you owe us $X.xx. If you agree send us a check, if not tell us why." This way you can let them locate the problem and fix it through normal channels.
If they fail to catch it, you can file an amended return AFTER your original return is processed. You'll know when that happens when they either issue your refund check or cash the payment check you sent them. If they fail to catch it, amend then but not before.
Gene E. Utterback, EA, RFC, ABA
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