@ahmed041 wrote:
@Opus 17 @RobertG
Hi: I used turbotax to file 2018 tax and I took standard deductions. No schedules. I have the copy of the 2018 tax forms. I used original forms to prepare the 1040-X. I used pub 525 method 1 and 2 to determine the best option and I found deduction would be the best for my case. When I filled out the 1040-X, i used $5K in column B. and corrected AGI in column C and filed rest of the form as suggested. My plan is to explain why am I making making this correction in PART III of the 1040-X form. Do I need to provide a proof that I repaid $5K? My plan is to submit 1040-X, original 1040, and other supporting documents. Please suggest if I am missing anything. Thanks for the feedback. FYI- I am using the PDF hard copy of the 1040-x form.
You do NOT send the original 1040. You prepare a NEW 2018 tax return containing the corrected information. In this case, that means listing the repayment as a special itemized deduction on schedule A, line 16, along with the reason. However, if you have no other itemized deductions and the $5,000 is less than the standard deduction, it won't change your tax or get you any refund. So you would need to add all your other itemized deductions that you did not include on your original 2018 return. The total of your itemized deductions transfers to line 8 of form 1040. Then you recalculate your tax owed from the tax tables. Sign and date the completed NEW form 1040. THEN prepare form 1040-X by doing a line by line comparison of the old and new form 1040 and write your explanation in part III. Mail the new 1040 with schedule A and the 1040-X to the IRS. Don't send other documents.
Because you used the standard deduction in 2018, I think your determination that the deduction gives you a better repayment than the credit method is incorrect. You may be better off seeking professional in-person advice.
If you wish to proceed manually, you need to use the following steps.
1. Get a copy of your 2017 tax return. Download the blank forms and instructions for 2017 from the IRS web site. Prepare a new 2017 tax return but reduce your line 7 wages by the $5000 repayment. Re-calculate your tax due on line 56. Follow all the steps in the form 1040 instructions. The difference between line 56 on your original return and revised return is the amount of your credit.
2. Download the 2018 tax forms and instructions. Prepare a NEW 2018 tax return will all your wage and deduction information from the original return. You also need Schedule 3. Put the credit amount on line 54. Check box "c" and write "IRC 1341" on the line next to box c. Line 55 from schedule 3 transfers to line 12 of form 1040 and check the box for "b". This will result in a different amount of tax at line 15 and a different amount of refund at line 19.
3. Using form 1040-X, copy information from your old and new 2018 1040 forms. Lines 1-5 should not change. Line 6-11 will show the lower amount of tax liability. Lines 12-15 should not change. Line 18 is your original refund, line 21 will be the new additional refund and should be the same as the amount of the IRC 1341 credit you entered on schedule 3. Write an explanation in part III (you are taking IRC claim of right credit for wages paid to you in 2017 and repaid to the employer in 2018).
4. Sign and date the NEW 2018 1040 with schedule C. Sign and date the 1040-X. Mail the 1040-X and new 2018 form 1040 with schedule 3 to the IRS. Do not mail the revised 2017 return (this is only a worksheet to calculate the proper credit). Do not mail your original 2018 tax return.
