Return Filed and Accepted, Error made in IRA classification

[g4uayt]

My college going son e-filed his federal return and it has been accepted by IRS, but the refund has not been approved and received by him yet.  In his return, the IRA contribution he made in  2019 was incorrectly classified as Traditional IRA, but was actually a ROTH IRA.  He received a deduction for that, which increased the refund amount.  He needs to correct the error. 

- Will IRS correct the error on his behalf and reduce the refund amount accordingly?

- Should he wait till IRS completes processing of his return and approves/corrects his return and then file the amended return? 

Thanks

[JulieS]

No, the IRS will not correct the error before issuing the refund. They would catch it later on, but it would probably be a few months at least.

Your son should amend his return, but he should wait until he receives the refund before mailing it in with the amount that he owes. 

Click here for information on filing an amendment.

[g4uayt]

I have a follow-on question to this.  My son had to file 3 state returns as he had earnings due to internships/Teaching Assistant in 3 different states.  He is a resident of Virginia.  On his original filing, he is expecting a refund for Federal, VA, PA returns and owes a small amount of tax on his NY state return.  When he amended his return to correct the IRA type from Traditional to ROTH, he owes taxes on the Federal and VA state return that will lower the amount of his refund for both Federal and VA state.  He will be filing an amended Federal and VA state return.  The change of deduction from Traditional IRA to ROTH IRA did not impact his taxes for Pennsylvania and New York.  Does he need to file an amended state return for PA and NY state?

Thanks

[JohnB5677]

No, he is filing the Federal and his home state.  Although he earned income in the other two states, only the home state got the deduction for the traditional IRA contribution; therefore only his home state would incur the additional tax from correcting it to a ROTH.