Would you file an amended return?

[schildi]

I had posted this on the YM section, but was made aware that there actually is a tax board here as well. So here it goes:

When doing my taxes this year, I noticed a deduction we can take but have not taken last year: the cost of DS's preschool. He goes there a couple hours a week so my wife has time to prepare for her weekend teaching job and do administrative work for the school she teaches at.
So I went into last years TurboTax, and it looks like we could get another $120 or so back if I would file an amended return. It's already completed, I'd just have to print and mail it.

Now my hesitation is that I do not want to risk an audit by filing an amended return. No, I was not cheating on my taxes, everything is correct on all my returns as far as I know (I took standard deductions always anyway - no state tax). Just the chance of an audit and having to dig up years of paperwork frightens me.

What would you do? I feel that an amended return could pose an audit risk. Would you do it for $120?

As a side note: Somebody on YM mentioned I could not take the deduction because the wife does not work full time. I think that's incorrect, but I wanted to check here as well.

[Gardening Grandma]

If I felt confident that I was entitled to the deduction, and had the proof, I'd certainly file an amended return. I don't know whether filing an amended return increases one's odds of an audit, but somehow I doubt it.

[mwcpa]

there is no federal income tax deduction for "pre-school" but the costs can qualify for a dependent care expense credit (see form 2441) form link here... www.irs.gov/pub/irs-pdf/f2441.pdf ... instructions link here www.irs.gov/pub/irs-pdf/i2441.pdf

other data can be found at irs.gov

also, some states piggy back this federal credit, so check your home state

the risk of audit is minimal for something like this... and if you were audited and as you note "I was not cheating on my taxes, everything is correct on all my returns as far as I know" then what is there to fear....

[schildi]

Thanks to both of you, I appreciate the feedback. Based on what you guys said, I have decided to go ahead with it and file the amended return.

Now I have just one more question before sending it out: In my case where only the child care expenses have changes, what forms do I need to include? Here is what I am thinking of mailing:
- 1040X Amended Return
- 1040 (updated version)
- 2441 Child and Dependent Care Expenses
Is there anything else needed to be included in the mailing? Since nothing else changed, that should be it, correct? No schedule D, etc., right? TT did print out a confirmation form of last years filing ("electronic postmark"). Do I mail that?

Thanks a lot everybody!

[TheOtherMe]

You only need to send in what has changed: the 1040 and Form 2441 attached to the Form 1040X.

IRS doesn't need the electronic postmark.

[schildi]

Thanks, taxpro, it is very much appreciated!

[ShoreEA]

NO NO NO NO NO!
Do not ever attach a 1040 to a 1040X!
Just send the 1040X and the 2441.

[schildi]

Jan 28, 2011 23:18:51 GMT -5 ShoreEA said:

NO NO NO NO NO!
Do not ever attach a 1040 to a 1040X!
Just send the 1040X and the 2441.

Why? The 1040 is one of the forms that changed. Is including that not a requirement?

[activeonlooker]

We always would include any form affected. Both the "as originally filed" and the "as amended" versions of each respective form as well as a spreadsheet summarizing each changed number.

[schildi]

Ok. It seems like everybody has a completely different opinion about what should be included and what not. Interesting, really! So that tax stuff is not an exact science.
Thanks for all the replies! I'll have to think about it a little more here, this seems like quite a bit of a mess for a few bucks. Time is on my side, I have another 700 days or so to make up my mind!

[TheOtherMe]

Jan 30, 2011 0:02:27 GMT -5 @activeonlooker said:

We always would include any form affected. Both the "as originally filed" and the "as amended" versions of each respective form as well as a spreadsheet summarizing each changed number.

I was taught to include all forms affected and write AS AMENDED across the top of all forms except the Form 1040X.

[taxref]

I have always filed amended returns in the same manner as ShoreEA, ie: I have never included the original 1040 with the 1040X and revised forms and schedules. None have ever been rejected for not including the original 1040. In this case I would file the 1040X and the 2441.

The 1040X already summarizes the orginal and amended numbers, and includes a place on page 2 to describe changes. The other forms (in this case a 2441) gives the details of the changes.

[TheOtherMe]

I never was taught to include the original 1040 as IRS has that, but we did include the 1040 AS AMENDED, etc. with the 1040X and that method worked also.

[schildi]

Well, it's in the mail. I only put the 1040X, the 2441 and a copy of the tax statement from the preschool in the envelope. I am sure if they want something in addition, they'll let me know. I will report back what happens when I get the refund or a letter.

This is an interesting topic. Not even the CPA's on here know (or can agree on) what should be mailed. I am sure that this is one of those things where when you'd call the IRS three times, you'd get three different answers as well.

[ShoreEA]

I am sure if they want something in addition, they'll let me know. I will report back what happens when I get the refund or a letter.

You did the right thing. All that other "write on the top of the form", and "as amended" stuff was correct at some point in time. Like a time when IRS ran without any computers at all. The key these days is the explanation. If there is more than one change to AGI, or any other key lines, explain it so that even IRS's worst employee can understand it. Here's one I've seen a dozen times over the last 5 years: A client who has a small amount of taxable Social Security receives a 1099-INT for $500 AFTER he has filed his return. We have to amend the return to report additional income. The $500 of interest increases AGI by $750, because for every $2 of additional income, $1 of Soc Sec becomes taxable. If a lazy, or ignorant tax preparer writes on the 1040X explanation line, "additional 1099-INT received", then their client will receive a bill from IRS for the tax on $375. Why? Because if $750 of "additional 1099-INT" income was received, then $375 of Soc Sec becomes taxable..... You see where I'm going now, don't you?
The explanation should read, "Additional 1099-INT income of $500. Additional taxable Social Security of $250. Net increase in AGI: $750."
Forms that change must always be attached, but simply filing a 1040X indicates that the original 1040 was wrong, so it should never be attached.
Thanks for your support, taxref. Snooki sez "Hey!".

[schildi]

Jan 30, 2011 20:06:05 GMT -5 schildi said:

Well, it's in the mail. I only put the 1040X, the 2441 and a copy of the tax statement from the preschool in the envelope. I am sure if they want something in addition, they'll let me know. I will report back what happens when I get the refund or a letter.

Here is me again, reporting back: got the refund from the amended return in the mail today by check. The INS was nice enough to add $3.90 in interest to the $127 refund.
So the amended return without the 1040 was accepted. Thanks for all the help!

[nomngal]

And don't forget to include that interest on next year's return. They will be looking for it.

[schildi]

Mar 1, 2011 10:28:29 GMT -5 @nomngal said:

And don't forget to include that interest on next year's return. They will be looking for it.

Wow, for $3.90? I thought under $10 does not need reporting from any source?
Well, they'll send me a 1099 then, right?

[mwcpa]

reporting of payments by certain payers and the requirement for the receiver to reflect all income from all sources are two different rules.

under the federal tax law one is required to report all income from all sources unless specifically exempted. the law does not say if the income is not reported on a 1099 (or other IRS form) that it does not need to be on your tax filings. while 3.90 would probably have little or no impact on a tax filing that does not mean you should not report it if a 1099 does not come.

[schildi]

Thanks, mwcpa!
Wow, that may mean another amended return.
I received 12 cents in interest from my local bank - I know because it was exactly $0.01 every month - they probably rounded up, lol. I know they did not send me a 1099, but I am not sure if I included that "income". Have to double check. Bummer!

[commentator]

Mar 1, 2011 23:22:12 GMT -5 schildi said:

Mar 1, 2011 10:28:29 GMT -5 @nomngal said:

And don't forget to include that interest on next year's return. They will be looking for it.

Wow, for $3.90? I thought under $10 does not need reporting from any source?
Well, they'll send me a 1099 then, right?

There is no minimum amount of income below which the taxpayer need not report it -- except maybe 49 cents or less.

[mwcpa]

generally, one can report income in whole dollars, so 12 cents would be rounded down to zero... but 51 cents would be equal to a dollar....

so, if the rules was "only report" what you get on a 1099, then all of my clients that pay me under 600.00 is tax free (threshold for 1099-misc).... or are the rules different for me....(once I had a potential client actually tell me that....you can guess what I told them about the door and their backside)....

[schildi]

I checked, and I actually did report the 12 cents. But really, I don't think I'd worry about it either way.

There were two letters in the mail today from the IRS, one addressed to me, one to DW. My first thought was: great, there is the audit notice. But no, they just informed us to expect a refund check for the amended return in two to three weeks, the one we got two days ago. Talking about the right hand not knowing what the left hand does ....

[activeonlooker]

I can't believe you got the refund so quickly