Amended return but refund applied on original

[bgiez]

return.

Client applied $900 refund on 2010 return, just filed 2 weeks ago, to 2011 estimates. She just got another 1099B (yes, she actually sold something at a gain) that increased her tax liability for 2010 by $270.

When I do the 1040x, line 19, Amount You Owe, shows $270, but my program's carryforward information for 2011 shows the applied amount as reduced by $270.

My question is, can we send in the amendment without a payment, and, if so, do I (or can I) show somewhere that it reduces the payment carried forward to 2011?

Thanks for any input.
Barbara

[bgiez]

Maybe I'm not asking the question correctly or clearly

If we send the amendment in without a payment, because we want to adjust the amount of 2010 refund applied to the 2011 return, will the IRS be looking for a check, or will they just adjust the applied refund?

[Gary2]

They'll be looking for a check. The original refund has been applied to 2011 and can't be changed to 2010. See the 1040X instructions.

[bgiez]

Thanks, Gary, but...

I'm not totally convinced that the instructions mean what you say. It could be argued that she is not reversing her election to apply her 2010 refund to 2011, only that the amount of the refund has changed. However, given the time that it will take the IRS to process the amendment, if you are correct, she would be hit with interest & penalty, so I will probably advise her to send a check. Unless someone else wants to weigh in???

[ToledoEd]

I am pretty sure that once a return is accepted the IRS will apply the refund as requested on the original return. In the past I have had returns that got changed after filing and the IRS never changed the amount they applied to the following year.

[Davc]

The election to apply an overpayment is irrevocable.

[Terry]

1040x

I'm with Gary on this one. Once an overpayment has been applied to the following year, the amount can't be changed. I would definitely have my taxpayer send in the money.

And as previously stated, an election to carryover an overpayment is irrevocable, and the amount cannot be changed.

[Burke]

I agree with this. Have learned from experience. And so will she. They treat it just as if she got the money back in a check and then sent them a check for 2011 estimate. Think about it. If she had done that, would they give her the money back? No.

[GRich0656]

May not help your fees, but rather than amend, she could just wait for the CP2000 and send the check in then. It is possible she will have the refund from next years return before receiving the notice.