We submitted our 2020 tax return via efile (turbo tax) and expected a refund. The IRS discovered there was an error with the stimulus calculation and informed us we had a balance due of $2k. We recalculated our return and determine we should only owe the IRS $100. We sent them a letter explaining this and also included a hard copy of the new tax return plus the $100 check payment. The check was deposited, shortly after we received a letter demanding the original amount due of $2k. It appears that it may have been crossed in the mail. My question is, not wanting to confuse things more, should we e-file an amended return via Turbo tax software or should we address it by responding the payment demand letter? Thank you
Stop and wait ... the new notice was auto generated because the response to the first notice has not been processed yet.
"We sent them a letter explaining this and also included a hard copy of the new tax return "
This is not the correct procedure for fixing errors.
IRS will not process a second Form 1040, revised or otherwise.
The correct process is to submit amendment on Form 1040-X.
Form 1040-X becomes your new tax return.