@Anonymous wrote:
Thanks @Opus 17 ! Appreciate the quick response.
Can I not just file the amended 2018 return now with these numbers? Is using the 1341 method just to avoid dealing with filing an amended return? I don't see why it matters to the IRS as the refund amount is the same. Is there a reason I cannot file the amended 2018 return in this way?
Thanks!
You can't file an amended 2018 return because you actually did receive the money in 2018. That's why box 1 and box 2 were not changed. Taxpayers report income when actually received and deductions when actually paid. Boxes 3-6 were adjusted because the employer has adjusted your social security credits based on your corrected wages, but you can't amend because you actually did receive that money in 2018.
However, you have correctly identified one method to calculate the amount of the IRC 1341 credit. You may want to print a copy of the adjusted 2018 tax return and save it with your 2020 records to prove the credit amount if audited.
Your state will not allow an "IRC 1341" credit because IRC is federal code. However, your state may have a claim of right procedure that is equivalent. And using the desktop program will allow you to make any manual entries necessary on your state return as well.
Now, if you know that you are anticipating a federal refund that is $2000 larger than normal, you might want to adjust your withholding on your W-4 form now. You could get $200 per month extra take-home pay now instead of waiting until next March to get the $2000. I haven't used the new W-4 so I'm not sure how that will work. You can also use the IRS withholding calculator to tell you how to file a new W-4, and include this as one of your anticipated credits (along with any dependents, etc.) If you do this, just be sure to reset your withholding for 2021 so you won't be under-withheld.
