Error on e-filed tax return

[pmedders]

Client had new mortgage loan and paid points in 2005 of $4700. Client originally told me he put $5000 toward closing costs so I deducted all of the $4700 points on tax return. Now client has come back to me and said actually only paid $2700 towards closing costs. Tax return was already e-filed a day earlier. How would you correct? Should I send an amended tax? If so, should I wait until orginal return has chance to be processed?


Another completely new issue - another client who had someone else do her 2004 tax return also had a new mortgage loan and had points on that loan in 2004. Tax preparer did nothing with the points on her 2004 tax return - should have been amoritized. Now in 2005, client refinanced mortgage. Can we now claim what would have been the remaining balance of the points from the 2004 mortgage even though not claimed in 2004?

[Gretel]

I will answer the first question. Yes, you will need to file an amended tax return. No need to wait because e-file will be processed before they even think of taking a look at the X.

[JG EA]

2nd Part

Sure. If they itemized in 2004 and didn't claim the part of the points that applied, you could amend, but the benefit probably wouldn't pay for the return. If they didn't itemize, then you amortize the points and wait until they do itemize.

So, if you were picking up this amortized schedule this year you would deduct the correct portion of the points, right? So, if they refinanced "with a different lender" then you could take the rest of the points.

I suppose someone could argue that you'd need to note it on the tax return with a 4562 in the year beginning the amortization. I never did a 4562 for points, just put it on the A. In fact, it wasn't until this year that my software even allowed amortization of points. I can't imagine that would be an issue.