I really messed up my 2009 return. I forgot to include an interest payment from a bank, and the IRS's computers got me. Then I also notice that I had used the standard deduction when I should have itemized.
Should I straighten out the interest problem by paying the tax, penalty, and interest first, and then file an amended return, or should I make all the corrections in my correspondence with the IRS?
No reason wy you can't combine severall fizes in one amended return. Do all at once. Send amended return and all paperwork to the address on the notice.
I'm not sure what you mean by "correspondence", but there's a form for revising an erroneous return: 1040-X.
I would recommend making a single correct filing. That might also save you money: to the extent your taxes don't increase as much as they would from _just_ the missing interest, the penalty and interest are also lessened.
Seth
Unlike the other responses, it is NOT appropriate to send a Form 1040-X in response to an IRS notice or audit.
However, make certain that they do it correctly. I have found that sometimes, they do not.
Where is your source for that?
How to do it correctly?
The instructions printed on the IRS notice. Nowhere do they request or suggest that you send in a 1040X.
Some practitioners will send in a pro forma 1040X when helping a client, to illustrate how the numbers should change, but in such a case I would advise taking great pains to label such a form "DO NOT FILE", in large and colorful printing if possible (and don't sign it, either).
The danger is that a 1040X might accidentally commence processing through "normal" channels in parallel with an AUR (automated under-reporter, AKA computer letter) process, which can potentially make ultimate resolution very messy.
The proper response to a CP-2000 notice of under reported income if you disagree with the additional income is to NOT file a 1040X, but to respond in writing as to why you disagree. If you agree with the additional income the IRS wants to include, the proper response is to agree and send a check. However, if you agree with the income but you have offsetting changes to the income, the proper response to the CP
2000 is a 1040X.See Tax Topic 652 - Notice of Underreported Income ? CP-2000:
You must respond within 30 days of the date of the notice or 60 days if you live outside the United States. An envelope will be enclosed for your convenience. If you have lost the envelope, please send your response to the address listed in the upper left hand corner on page 1 of the notice. Send your responses (including Form 1040X) to the address on the notice and attach a copy of the notice (CP-2000, CP-2501, or a statutory notice of deficiency).
It's possible that things have changed since I left the IRS 2 decades ago, but back then, if there were changes to be made other than the area(s) under examination (or notice), the appropriate thing was to present the issues to the IRS during the audit - NOT using a form 1040X to do so, or to wait until the audit had concluded on the IRS side (meaning usually 60-90 days after the employee closes the case). That means that form 1040X was NEVER appropriate, unless specifically requested by the IRS employee in charge of the case.
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