Hello, I'll be filing an amended return for 2019. I am the primary filer and my wife is "spouse" for married filing jointly. My wife started an inherited account from her mother who passed away in November 2019. The inherited account started at her mother's date of death, so there were one and half month of dividends and capital gains activities from mid November to end of December 2019. I was not aware of this account until early December 2020, so I did not include the dividends and gains when I filed the MJF tax returns in March 2020. I just got the 1099s from my wife's brokerage in December that show dividends and gains totaled to about $1,700, and the additional tax for this income calculated to be around $300 using the TurboTax software. Here are my questions:
1. What should I write for the explanations in Part III of the 1040-X form to minimize or get waiver of penalty and/or interest? Should I just say simply "Did not get the 1099 forms from a brokerage firm"? Or "Did not get the 1099 forms from a brokerage firm until December 2020. The brokerage account was a new account set up in November 2019"? or something else? Someone told me not to explain too much as it may confuse the matter more.
2. When reading the 1040-X instructions, on the top of page 8, it has a section "Waiver of penalties and interest". Th paragraph says "If you pay the entire balance due on your amended return within 1 year of timely filing the balance due, no interest or penalties will be charged on the balance due. Payments made after you file Form 1040-X should clearly designate that the payment is to be applied to reduce the balance due shown on the Form 1040-X". So it appears that if I file the 1040-X before April 15, 2021 (within one year? or at the end of Dec 2020? or by March 20, 2021, the one-year date that I signed the return?), there won't be penalties and interest? If that is the case, I can just simplify my explanation in #1 above that I just "did not get the 1099s from one brokerage firm"?
3. It looks that I'll have to file a paper amended return because e-filing period is over. I want to send a check in the mail. Page 18 of the 1040-X instructions has a section "Pay by check or money order". The last sentence in the first paragraph says "Don't attach the payment to your return"? So I am not supposed to send the payment with the return? Or does it just mean "do not staple the check to the return", and I can put the check loose with the 1040X amended forms in the envelope?
4. The "Pay by check or money order" section also says "On your payment, put your name, current address, daytime phone number, and SSN. If you are filing a joint Form 1040-X, enter the SSN shown on the first on the return. Also, enter the tax year and type of return you are amending (for example, "Amended 2018 Form 1040". Do they want me to write all these on the check? I can put in the SSN and "amended 2019 form 1040" on the bottom left corner of the check, but there is not enough room to write in all other info such as current address and daytime phone number. Do I put the information on a separate blank sheet of paper instead?
5. If I choose the IRS Direct Pay to transfer the payment from my checking account, how would IRS match the payment with my mail-in 1040-X amended return? What would the IRS payment screen show?
6. I take it the best way is to send the return in certified mail with a tracking number that I can see the letter has been delivered?
Thank you for your help in advance.
