@ahmed041 wrote:
Hi @Opus 17
I followed your instructions and manually completed these following steps.
4. You mentioned that 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.
Q1. How would IRS know that I repaid the $5K? Don't I need to send any proof?
Q2. Do I need to write a cover letter?
Thanks for your assistance. I probably couldn't complete these without your valuable inputs.
It sounds correct but I am not a professional tax advisor and I can't see your forms so I can't personally guarantee you are correct. Turbotax is for self-preparation and you have to take responsibility for all the information you submit.
I have also understood that you send any changed forms with the 1040-X, but fanfare may be correct, the instructions for the 1040-X say you don't need to submit form 1040 again. You do need to include the revised Schedule 3.
You explain your situation in part III of the 1040-X, you don't need a separate cover letter.
The tax system is based on trust plus enforcement,. There are many items that can be reported on a tax return that are not automatically supported by back-up documents at the IRS--the IRS gets wage and income information from W-2s and 1099s but does not get verification that you bought an electric car or made charity donations, for example. The IRS can't possible evaluate every piece of proof on every tax return, or they would never get tax returns processed and refunds paid. The IRS selects tax returns for additional verification based on formulas and rules they keep secret, and they will send a letter if they want to see copies proving a particular claim. Keep your proof handy for at least 3 years, but you don't send it now.
