Amended 2019 return to file jointly with my wife and she got a letter from the IRS asking for more money.

[mveerman]

In 2019, my wife filed separately and took the standard deduction. I also filed separately, but chose to itemize my deductions. I learned later that you can only file separately if you both use the same deduction type, and also determined that filing jointly would result in a better refund, so I amended our return. I recently received a notice in the mail, addressed to both of us, that our amended return was accepted and,"if the adjustment results in a refund, and you don't owe any other taxes or ..., you will get a refund...". In our case, the TurboTax amended return results showed a refund. I few days later I was surprised see that the IRS had sent a second letter addressed only to my wife that said, "We made the changes you requested to your 2019 form 1040 to adjust your total federal income tax withheld. As a result you owe $xxx.xx." I'm confused because I thought the amended return to file jointly essentially tosses out both of our old returns, and would have expected any additional amount that she owed to essentially subtract from what we both were to receive due to our new calculated over-payment of tax based on the change in filing status. Maybe this is entirely normal and the easiest way for them to balance their books, but I'm still confused. Thanks for any advice you can provide.

[NCperson · Accepted solution]

@mveerman -

1) when your wife originally filed that separate return, did she get a refund? if yes, THAT is what the IRS is asking for - asking for the refund back..  Her entire tax return is wiped out as if it never existed and for that to occur any refund she received has to be returned.

2) I suspect you amended your return from MFS (Separate) to MSJ (joint), so that return reflects the total picture of your family, and resulted in a refund.  

But I would hope that the return of the refund in #1, net of the refund you did receive in #2 (from both your original tax return and the amended return), put money in your pocket.  if not something is wrong as filing joint is less of a tax burden than filing separately.

is that what happened? 

[mveerman]

Yes! Thanks that makes complete sense and that's exactly what is going on. The amount they are asking is more than her refund, which is likely the refund plus interest. Yes, even if we return her original refund, the refund we expect from the new, amended return is still greater. Thanks for the explanation.

[VolvoGirl]

Which MFS return did you amend?  Yours or hers?  You only need to amend one of them to Joint.  Then on the amended return you should have entered both spouse's refunds or tax due.  1040X Line 18 should be yjr original refund amount and line 21 should be your additional refund. If you paid on your original return it will be on line 16. If there is an amount owed with the amendment, it will be on line 20.  

And if the IRS letter said  adjusting the total tax withheld that sounds like something else is going on.  

[Critter-3]

Amending to combine 2 MFS returns to 1 MFJ return is not easy and the TT program will not do it automatically.  The downloaded program is required to make needed changes using the FORMS mode especially for lines 16 & 18.  

If you only amended one return then that is correct however I bet you made an error on line 16 or line 18 ... maybe both.  

So if you both got refunds on the original returns  then the combined refund amount should have been on line 18 ... did line 18 reflect the total ? 

Did she have a balance due on her original return ?   Did she pay it ?   Was this reflected on line 16 of the 1040X ?

[fanfare]

If you did not include her refund and your refund under "Overpayment (refund) on 1040-X,

then that is a problem and that is why the IRS is asking for it back..

@mveerman 

[mveerman]

I just confirmed that the amount of overpayment I declared on line 18 on the 1040-X only included my original refund and did not include my wife's, so that's exactly why they want her original refund back. Thank you!