Just received updated 1099B for 2020 and it affects the loss carry over for 2021 return. Can I correct them at the same time?

[hmike]

So, I just received an updated 1099B and 1099DIV for the 2020 return. It reduces my loss, but also reduces the taxable dividend (recharacterized as return of capital)  and I am due about $200 back for 2020. However, this will affect 2021 return (I will probably need to pay some money) due to the different loss carry over ($200-300 difference, so a small effect on the taxable amount).

Do I need to correct 2020, file, wait for it to be accepted and the file the corrected for 2021? or can I file them at the same time? I assume that I will have to write them a check for 2021, and I will be due a refund on 2020 once they process it. 

Also, I used TurboTax Desktop for both returns. Is it possible to do the correction electronically?

[rjs · Accepted solution]

You don't correct your original tax returns, or file a corrected tax return. You file an amended return on a special form, Form 1040-X. See the following FAQ for instructions.

How to amend (change or correct) a return you've already filed

You can file the two amended returns at the same time. You don't have to wait for 2020 to be processed before you file 2021. But each year has to be filed separately.

You will not be able to e-file the 2020 amended return. You will have to print it, sign it, and file it by mail. If you e-filed your original 2021 tax return, you should be able to e-file the 2021 amended return. You can use Direct Pay on the IRS web site to make the payment.

If you filed state tax returns, you might have to amend those as well.

[Mike9241]

this is a situation without a perfect answer.  technically you should amend, however, this change is small and the IRS may not bother you if you do not amend.

if you amend you will not be able to e-file 2020 so it could take 6 to 8 months, maybe longer for the IRS to process it. until it is processed you'll not be able to find out its status.  I would also suggest that you send by a method where you get proof of delivery.

as to 2021 if it's been fully processed you can amend it at this time and e-file. it is unknown if the IRS will hold up processing until it gets the 2020 amendment 

with the 2021 return the tax was due 4/18/2022 so not only will you owe the tax but the IRS may charge penalties and interest. 

if you have a state return that further complicates the matter.

[fanfare]

"(I will probably need to pay some money)"

If you want to amend 2020 for $200 refund, do so and then wait.

Do not amend 2021 tax return (if at all) until the 2020 amendment amount is refunded to you.

@hmike