amended Social Security Statement

[JenMO]

Teacher, who doesn't even receive enough SS to pay medicare, called the local SS office because she had not rec'd a statement for 2014. She checked twice, and both times was told that she would not received a statement because all her benefits went toward Medicare (she has to make the rest by sending a check from her personal funds). So we went ahead and filed her return, putting nothing in line 20A because of what she was told.. Guess what? This week she received an amended SS-1099 with an amount on it as benefits. If we put that amount on 20A, which is what I would have done if she had rec'd it in the first place, she will pay on 85% because of her income. Not a big amount, and she's ok, but now I have to amend because of incorrect info she received from the SS office, and them not sending it out in the first place. Has anyone else had this?

[JenMO]

I did the amended, she owes $8 to the Feds. Will they bill her for that if we don't amend?

[AZUKHiker]

No legal obligation to file amended return

Remember there is no legal requirement to file amended tax returns even when tax is owed, provided the original return was filed in good faith.

So you could just wait for the CP2000 to come out and provided the tax due on the notice is paid within 30 days there will be no late payment penalty. Interest on the tax due will still run from April 15.

Just make sure you have complied with your Circular 230 obligations by advising your client of the tax implications of not reporting and amending the return.

From a practical viewpoint you may wish to consider how you will get paid for working out they owe $8 if you don't go ahead and file the amended return. If there is no tangible product such as a return will the client balk at paying the fee for advising them not to file an amended return?

[Roland Slugg]

AZUKHiker is correct: There is no requirement expressly stated in the Code or Regs to file an amended tax return. The Regs do say, in various sections, that if a taxpayer discovers an error in an open year's return, that he should file an amended return. They do not say he shall or must file one.

Nevertheless, there are penalties for underpaying one's taxes, so if a taxpayer discovers an error that resulted in an underpayment, he would be wise, in most cases, to file an amended return to correct the error(s). As for me, I would always advise a client that he should consider filing an amended return, and I would advise him of the potential penalties and interest if one is not filed. However, I also believe that practical considerations should be taken into account. I would not urge a client to file an amended return for a trivial change in tax. What is trivial? I would regard anything less than $100 to be trivial in most cases ... maybe a little more for some taxpayers ... a little less for others. Not even the IRS wants to deal with trivial matters in most cases, and I don't think that agency would even bill a taxpayer or send out a CP2000 or similar notice for less than $25 ... at least I have never seen one.

For the case in question here, I would advise the client that an amended return is an option, but that a more sensible plan might be to do nothing, then pay the small additional tax due, along with P&I, if the IRS ever sends a notice of tax due.

[taxea]

and if you wait for the CP2000 there will be more penalty and interest to deal with. Hopefully your client has a name and phone number of the SS employee who provided the information. A statement of facts might eliminate the penalties and interest, however, she should have reported the amount of medicare they were paying as income and claimed it as medical premium on Sch A.