Filed 1040A early & got my refund. Received a 1099-DIV form later in April. The form was showing an amount that was slightly too high. In order to avoid interest charges, i went ahead and made a payment calculating the tax i would owe using the current 1099-DIV form by April 15. I did not file a 1040X yet b/c i thought i had at least a year to do so, and i have not received a correct 1099-DIV form yet.
The IRS just sent me back my payment plus interest. 1) Does this mean i do not owe additional taxes – wouldn’t they have seen the 1099-DIV form? 2) If not, then how do i avoid interest penalties now since they issued a refund check? Thank you!
Most likely the IRS did not send your payment back because of a corrected 1099-DIV. There was probably another issue on your return.
I believe you have two issues here that need to be solved separately:
Issue #1: The unexpected returned payment: you need to call the IRS and determine why the amount was refunded. Based on the information, you can make correction or accept the change.
Issue #2: The incorrect 1099-DIV and 1040X: You can start the 1099-DIV correction process. It appears you have already asked the payer to make the change. If they have not done so (you can find out by asking the IRS to look at your Wage and Income transcript which will show the details of the 1099-DIV reported and amended to the IRS), you can ask the IRS to start a 1099 correction process. The IRS will provide instructions and you will use a Form 4598 with your Form 1040X to amend the return. This form, along with the phone call, will tell the IRS that there was an incorrect information statement filed. We provide some help on how correct a 1099 here in this post – the process works the same for the 1099-DIV.
I hope this helps. Unfortunately there is probably no way to get around talking to the IRS about the payment back.
Jim Buttonow is one of the resident debt experts here at GetOutOfDebt.org that helps people for free. Jim is a licensed CPA who spent 19 years with the IRS coordinating large compliance teams of IRS agents and specialized personnel. In the last 5 years, Jim has invented consumer and practitioner software and treatises on how to address many different tax issues. He has also represented many people before the IRS examination, collection, filing, and appeals functions. He currently assists taxpayers on an active pro bono tax practice aimed at serving people in need. He can be reached at IRSMind.com.
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