Superseded Return Didn't Supersede

Forum|Forum|5 years ago
May 24, 2021
1 reply
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Hello,

TT changed one of their income sections from 3 options to 2 and I selected the wrong one. Thought I was getting a refund due to new Covid tax changes. ESubmitted the return latter part of April then realized I chose the wrong option and actually owe them which I originally thought. Within an hour of Esubmitting I did a Superseded return, wrote Superseded in red on the top and mailed it in with a check. TT wouldn't allow me to resubmit the corrected return and it was too early to do an amended return.

My bank statement shows 8 days after submitting both returns IRS cashed my check but on the same day issued me a refund to my bank account. I thought a Superseded return was to take precedence over any prev returns. I know the refund the IRS sent needs to go back to them.

Will they be sending me a notice I need to send it back? Will they wait several months so I have to pay interest?

Any suggestions what I need to do?

Thanks

Critter-3

Level 15

And this is why you NEVER amend (not superseded ... that is a business return designation only) a return before the original return was fully processed ... that was the reason for NOT letting you amend too soon. If this is for a personal return then you should have mailed in a form 1040X (not an original 1040 with red letters on top) so although the check you sent was cashed right away it is highly unlikely the new 1040 will ever be looked at ... if it is it will be months from now.

Now if you did mail in a 1040X was the amount on line 18 the original refund you did get ? If so the IRS will eventually process the amended return and all will be right.

If you sent in a 1040 by accident then WAIT for the IRS to ask what that payment was for ... only then should you respond with the correct 1040X form ... please don't jump the gun again and make things much worse.

wxwx

Level 2

I have seen several of your replies in different places admonishing the filing of a superseding 1040 return. While I do understand the temporary confusion and delays these may cause, there are cases (which I won’t go into here) where filing a superseding return before the filing deadline would be the preferred method over filing an amended return after the filing deadline. One can find online articles by the National Taxpayer Advocate Service, an organization within the IRS itself, (as well as articles on other reputable financial sites), on how to file a superseding personal (i.e., 1040) return. The problem that arises is that unfortunately the IRS agents processing the returns don’t know how to handle them; that is, there a disconnect between the advice given to taxpayers and the training of the agents processing the returns.

While it is clear that a mailed superseded return would almost never be received in time to intercept an “erroneous refund” from an originally filed electronic return, eventually the superseding return (if postmarked before the filing deadline) should completely replace the original return and the taxpayer shouldn’t be charged interest if the correct payment was made when the superseding return was filed and the erroneous refund was timely returned. It does take time to sort out, so it’s something you absolutely want to try to avoid if possible. But, if taxpayers are being advised that an option is available, they shouldn’t be penalized or chastised for trying to responsibly follow the revision procedures just because agents aren’t trained on how to process these. One can find case law affirming the validity of superseding 1040 returns. These past two years have just been so overwhelming that patience and understanding is needed all the way around - by taxpayers and the IRS … as the IRS should continuously strive to improve clear communications and agent training.

Sent from my iPad

cparke3

Level 5

@cparke3 -

1) were you two both below $125k in 2020? (look at Line 11 of Form 1040) NYTimes reports that Dept of Education will use either 2020 or 2021 to determine eligibility so if 2020 was below 125k for each of you, you have some breathing room here to decide how to approach your 2021 tax return (and there is more time for more information to come out).

2) "sure about the tax rules" - that is why this has been such a "cluster" to determine how to exclude high income earners. Tax information is confidential at the IRS. They do not share with ANYONE or ANY organization - not even other parts of the federal government (see the fight to obtain Trump's tax return as just one example!). For the stimulus and child tax credits, the IRS itself were the ones doling out the money so they already had the data. But this situtaion is VERY different. Dept of Education can't simply ask the IRS for a data dump of 40 million returns to obtain tax information. DOE student servicers don't have the resources to ask 40mm people to access their tax transcripts and submit; that is why there will just be simple form and what I call "trust me". And certainly services can't process 40mm sets of tax transcripts before payments resume again on Jan 1. (and remember, PPP was a 'trust me' and that was a lot of money as well!).

3) amending spouses tax return to be part of a joint return isn't a problem. Folllow @Critter-3 advice above as @Critter-3 is a 30 year expert in this field. IRS won't process the amendment for 6-12 months, but again, should not be a problem for the student loan foregiveness as DOE will not have access to your tax return in any event, unless your provide it (i.e. they can't get it from the IRS).

4) New York Times:

DOE "will make some kind of application available by the end of the year. “The Department of Education will work quickly and efficiently to set up a simple application process for borrowers to claim relief,” according to a White House statement."

these FAQ's may help you in your journey!

https://www.nytimes.com/2022/08/24/business/biden-student-loan-forgiveness.html?action=click&pgtype=Article&state=default&module=styln-student-loans&variant=show&region=MAIN_CONTENT_1&block=storyline_levelup_swipe_recirc

I don't know. DOE has a similar application called the FAFSA which collects and verifies tax income information quite swiftly before notifying schools with a Student Aid Report (SAR) to determine income-based financial aid eligibility. So whatever application they are building for this Loan Forgiveness program is probably built on top of that. Never was under the impression that you could give false income numbers on your FAFSA because they can't verify it and walk away with financial aid you aren't eligible for, though it is true in that case that the schools are ultimately responsible for verifying information and making the decisions.

Concern is the people at DOE who now have to implement the President's directive probably don't want to consider amended returns, otherwise the forgiveness program could get really nasty if somebody amends 2 years later and becomes eligible and has made loan payments after the freeze ended.

P.S. Situation was the same for us in 2020, with the 2020 tax returns are currently filed separately. I could amend the 2020 return instead to be MFJ, but obviously it is no longer an option for superceding the 2020 return.