I recently e-filed my taxes and a week later a 1099-INT for came to my house for interest paid on a Certificate of Deposit I cashed in last year. The interest wasn't very much, approximately $84.00, but I know I need to pay taxes on this. Any recommendations on how to do this? I want to avoid paying penalties if at all possible. Thanks.
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File a 1040-X, to amend your return. However, you should wait until processing is complete. Depending on whether you were due a refund or owed additional taxes, that can be confirmed by either receipt of the actual refund via direct deposit or check, or confirmation from your bank that your payment has cleared your account (either cancelled check or image of one). That should occur long before this year's deadline, since you filed already. Then just follow the directions on 1040-X, and submit whatever additional payment would be required (probably no more than $20 -- perhaps as little as $5). Bill
You need to file an amended return, Form 1040X (and probably a state amendment also). Wait until your first return has been processed before filing 1040X. If you file the amendment before April 17, 2007, there won't be any penalties or interest due on the extra tax you owe. Dennis
It will cost the IRS far more to process an amended return than the tax you will pay. Give the taxpayers a break and do nothing. I do not think the matching program will catch it because it is below the tolerances. If it, does, they will bill you. If it is keeping you up at night (Monk) then send in a corrected return.
Wait until your current return has been fully processed, then file a 1040X before April 17. You'll have to send them a few bucks, but no penalty as long as the tax is paid by the filing deadline.
-- John D. Goulden
What are these tolerances? Are they published by the IRS or just informally known?
-- John D. Goulden
I don't believe any "toIerances" are published but I have encountered situations where additional interest on a corrected 1099 was between $75 - $100 and the IRS matching program did not catch it so I agree with the advice of doing nothing for now.
The advice you received so far, comes from practitioners who ~get ~ a feel for the levels, trust their instincts. The tolerances are protected information, and are occasionally changed depending on the dynamics of what the agency thinks will yield a reasonable return for efforts made to pursue that issue.
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