Amended return results in less Overpayment to be applied to next year's Estimated Taxes, yet TurboTax says I owe $ to IRS. Why is my overpayment decreased AND I have to pay the difference also?
I filed using Turbotax 2019 which I downloaded.
When you are amending your return you also need to change the amount you designated to be used toward the next year's estimated payments.
To change the amount, you designated toward next year:
I adjusted the overpayment amount by the increase in taxes. The 1040X refers to the old amount and says I owe that amount as a check to be sent to the IRS. So,does this mean the original overpayment will be held and I pay the difference with a check - even though the new 1040 shows the reduced overpayment? Or is the new (reduced) overpayment amount applied to my estimated taxes and I do NOT have to send a check? This is confusing?
I'm waiting for the answer to this as well. I've amended my son's 1040 for additional income but he shouldn't owe. I'm just adjusting the amount applied to his estimated tax but the 1040X is still reflecting a balance due. How do I adjust that??
The 1040X still reflects a balance due even though the overpayment applied has been adjusted for it. How do you reflect there is no balance due on the 1040X?
I have the same concern. I can find no way that Turbo Tax will transfer my original refund applied to 2021 estimated taxes to my amended (1040xt) submission. Would also like an answer.
@Anonymous
If you applied a refund to 2021 taxes, you can't undo that.
Therefore, if you amend and your tax goes up,
you must pay the difference with your Form 1040-X.
Thank You. That's what I thought might be the case, but appreciate your confirmation very much
ardvark
I have the same issue. I missed a 1099 form and am trying to amend my return. I overpaid in 2022 and applied the overpayment to 2023 estimated taxes. When I added the overlooked income using the turbotax n amend function, the amount of my overpayment (and therefore the amount of it I can apply to estimated taxes) decreased by the amount of tax I owe on the missed income. That is fine. I fixed the amount to apply to estimated taxes, reducing it by the amount that I have actually overpaid, which is less than what was on the original return by the amount of the tax I owe on the extra income. So I should be square, having less applied to estimated 2023 taxes and not owe anything. But the Turbo tax system is still saying I owe the difference in cash to the IRS, when in fact, I have already subtracted the amount I owe from what would be applied to estimated taxes. Will I have to pay that amount, even though the am applying less to estimated taxes by that same amount? What would happen then to the amount that I pay through an IRS bank deduction that I really don't owe? Will the IRS refund my overpayment, or will I have to just consider that the extra cash Turbo tax is saying the IRS should deduct is an addition to the now revised amount applied to estimated taxes? OR will Turbo tax somehow show the IRS that the amount shouldn't be deducted from my account at all? PLEASE HELP
The part of your refund you elected to apply to this year’s estimated taxes can’t be undone on an amendment (as Fanfare wrote earlier in this thread). An amended return is to be submitted only after the original return has been completely processed, and that processing includes the overpayment (which would normally have been sent to you, but in this case has been forwarded to another department of the IRS for the estimated tax).
In the 1040 instructions (here), the IRS tells us that you can apply the amount of any additional overpayment (if there is one, on line 21 of the 1040X) to estimated taxes. And then they tell us you can’t change that election (I wish this were written more clearly, but hey—it’s the IRS!).
@jomshopper, unfortunately this means you can’t currently get back any of that money now that your refund has dropped (and it doesn’t help until later). But I hope this was helpful. Be sure to re-post with any additional questions!
Thanks RalphH1 for your answer. A TT expert told me that I could use the "send check option" for the amount due on the unreported income but not send the check for the additional amount and explain in the comments that I just want to reduce the amount of my application to estimated tax. But if I can't change the amount that my original return said to apply to estimated tax, then perhaps I need to pay the difference after all? The problem is, on the REVISED 1040, while it says zero tax due, the amount to be applied to estimated taxes has now been reduced by the amount the amendment says I owe. So the revised 1040 uses the lower amount as "amount of line 34 you want applied to your 2023 estimated tax .." yet by paying the additional, I should have the FULL original amount applied to my 2023 estimated tax. which would not be showing on my amended return. What will happen to the additional amount I pay that I really don't owe? Can I add it to the newly reduced estimated tax amount as to reach the original total of estimated tax paid when I file next year? or will they refund it to me because they will correct the amount applied to estimated tax to the amount that is on the new corrected 1040?
(You’re very welcome!) The new version of the 1040 which shows up when you do an amendment has some FYI uses, but you’re not submitting that form — just the 1040X. And there can be confusion when we read that revised 1040 like a regular one, out of the amendment context.
The 1040X (with payment) shouldn’t change the amount already applied to estimated tax, so I definitely don’t think you need to worry about somehow losing some of your money. I do like the other TurboTax expert’s idea of sending the amendment without payment (with a request to take it out of the estimated amount). I can’t find any IRS clarification that it would do this (maybe that agent has seen it though), and the worst-case-scenario is that they send you a bill with some small penalties and interest (assuming the processing doesn’t take too long).
Another idea worth a try (in my opinion) is calling the IRS first (at 800-829-1040), as discussed in this article (about seven paragraphs in). Apparently the “Internal Revenue Manual” (the not-so-behind-the-scenes procedural rules for IRS employees) mentions a undefined “hardship” scenario wherein the amount applied to estimates can be changed. With a little luck (getting a person on the line, then getting them to change it), maybe you can take care of it up front, and feel more comfortable about sending the amendment without payment.
Good luck, @jomshopper! Let us know here in the Community how this project is going, and especially what other questions are coming up...
My thanks again RalphH1. I see that you entirely understand the situation and I really appreciate your help. It was news to me that the IRS doesn't get the corrected 1040 that I see in TT which shows the reduced amount of overpayment applied to 2023 estimated tax. Can you confirm that if I send in the additional $500+ it says I owe, that the IRS will consider that I have in fact applied the larger overpayment amount that I ORIGINALLY applied to estimated taxes (contrary to what the "corrected" 1040 is saying which is lowered by the incremental tax)? In that case, the simplest thing (though it seems unfair) is to pay the extra tax that the new 1099 income generated now, and to leave my estimated taxes paid with this tax return at the original higher level -even if Turbotax thinks its the lower amount when I go to file next year and I have to add the additional as a payment..... I fear that To take the other expert's suggestion and not sent payment could risk penalties if the IRS thinks I am not paying on time (even though I had a very substantial overpayment before and after the incremental tax owed). I may try to call the IRS as you suggest if I can find time - I expect it may be a long wait to speak to someone...
Yes, I agree that you will risk underpayment penalty and interest if your estimated tax payment is not received when due. Once the IRS processes your Amended Form 1040X, they will adjust your overpayment and apply the difference to your 2023 estimated tax or they might accidentally send you a check with the adjusted refund. If a refund is sent to you, please mail this payment back to the IRS as soon as possible. Also, be aware that an amended return will take up to 3 weeks after you mailed it to show up in the IRS system, and processing it can take up to 16 weeks.
Your other option is to make the 2023 estimated tax payment online at IRS.Gov or mail in Form 1040-ES with your payment.
The deadlines for the tax year 2023 quarterly payments are:
Also, when making these payments online, please make sure you are selecting the correct quarter.
See the IRS link below:
Thanks HopeS. To be clear the amount of overpayment that I said to apply to 2023 estimated covered the entire first three estimated tax payments and then some, both originally and when adjusted downward for the slightly higher tax. Ultimately what I would like to do is just tell them to reduce the overpayment applied to 2023 estimated taxes (it will still cover three quarters) rather than paying even more tax in cash now, when I won't owe estimated until January of 2024 either way. To me it just seems silly that the amendment doesn't let me adjust down the amount of my overpayment of estimated taxes by the amount of extra tax I owe rather than making me pay in cash the difference to get my overpayment back to what it was on the 1040 that was missing some income.
For practical purposes, if you file the amended return and don't make a payment even though one is due, the IRS will adjust the amount of estimated tax credited to next year's filing when you file that return, so it will all even out eventually. The only problem with that is you may be subject to penalties for late payment of tax.
And so is it correct that if I pay the extra tax, (to avoid penalties) then the amount applied to estimated tax for next year would be equal to the original higher overpayment on my 1040 before I corrected the return? (equal to the old overpayment minus the extra tax , but then plus the amount of extra tax)? In other words, having missed some income, the IRS is now requiring me to pay the difference in cash to maintain the original overpayment that I had applied to estimated taxes before correcting the return, just because I opted to apply my entire original refund to 2023 estimated tax rather than take a refund? Whereas if I had asked for a refund originally, paying the tax would just offset the amount of the refund I shouldn't have gotten in the first place. If this is all true it is a very convoluted system.
All of that is true except that if you had requested a refund in the first place and then received it prior to filing the amended return then you would have to be sending in the taxes with the amendment as well.
Right but I AM being instructed to send a tax payment with the amendment even though I did not ask for the overpayment as a refund. So what I am still not entirely clear about, is that if I send the additional tax payment with the amendment, will my overpayment and amount applied to 2023 estimated taxes remain the same as it was BEFORE I amended the return? The revised TurboTax 1040 does not show that - it shows a reduced amount of estimated tax applied to 2023, even though it is also instructing me to SEND the additional tax that the missed income required with the amendment. What is confusing is that it seems that it is both requiring the extra payment for this year, while also REDUCING the amount applied as estimated tax applied to next year by the same amount. Hopefully the IRS would recognize that if I send the extra tax, than my overpayment would not change.
Yes, as a rule the IRS leaves the amount of your refund you initially requested to be applied to the 2023 return from the original return. They do not usually get reconciled together that quickly and I have seen cases where they did not adjust the amount requested to be applied to your next year estimates. You can wait to send the additional tax to see how it gets reconciled if you choose. I understand your confusion as well.