In the year 2020, I filed for tax amend for 2017 for extra taxes that were paid in that year. While filing the tax amend, I accidentally put the amount due in Line 22 (i.e. Overpayment Received as Refund) as well as in Line 23 (Overpayment Applied to Estimated Tax).
Now, in May 2021 - IRS sent me two checks one for Overpayment Received as Refund (that includes interest amount) and one for Overpayment Applied to Estimated Tax for 2020 (that doesn't include interest).
Now, I'm confused so as to which check I should deposit and which one I should ignore. And, also do I need to notify IRS about this? It seems like if I deposit the check that includes interest rate (obviously a higher amount for me) then I've to show the interest as income for next year tax.
Interesting ... you cannot apply a 2017 refund to the 2020 return so they returned it to you. You can certainly cash that one.
Now the 2020 return ... did you add the 2017 refund to the payments section ? If you did that was incorrect. Review your return carefully ... what did you do ? Is the refund they sent (with interest) what you should have gotten ? If not did you get the IRS notice of explanation yet ?
Deposit both. the 2017 overpayment can only have been applied to 2018 not 2020. thus if you claimed the overpayment on your 2020 return the IRS will remove it. thus your refund/balance sue will change.
Thanks for reply.
I did not add 2017 refund to 2020 payments section. I didn't get any explanation. The two checks came in different mail.
It seems like I should just deposit the 2017 refund check?
I'm hesitant to deposit both the checks as then I'll owe to IRS. It seems like since it is not allowed to apply 2017 return to 2020 (and I did not apply that towards payment) so I should just ignore the 2020 check and deposit only the 2017 refund (with interest) check. Do I need to notify or return the other check to IRS? There was some note that if you do not agree with this adjustment then notify to IRS.
If the amount on line 21 is the sum of the amounts you put on lines 22 and 23 your amendment is valid and the IRS did the right thing.
It's unlikely the IRS would accept your 1040-X if that was not the case and pay you twice.