I want to avoid paying penalties but there is no way to contact IRS to let them know that the amended return should make up the difference. What should I do: 1) Just wait until the amended return is processed (and risk more penalties) or 2) pay the amount now and get a refund much later. The amended return takes as much as 15 weeks to process.
Yes, You have to pay the first tax due. Then the amended return will only be the difference you get back or need to pay. You can confirm this by printing your amendment and looking at the 1040X. Line 18 should be your original refund amount and line 21 should be your additional refund. If you paid on your original return it will be on line 16 (but don't include any penalty on 1040 line 38). If there is an amount owed with the amendment, it will be on line 20.
And amended returns are taking 20 weeks or more to process.
IRS Amended returns, FAQs
https://www.irs.gov/filing/amended-return-frequently-asked-questions
It says…… The current processing time is more than 20 weeks for both paper and electronically filed amended returns