1. Yes, you have to include your wife's income. When you file as married filing jointly you have to include all the income of both spouses.
2. You do not have to attach the 1099 forms if there is no tax withheld.
3. Yes, the IRS matches the income records of both spouses on a joint return. You would eventually get a notice, but it could take a long time. They have until July 2023 to review your 2019 tax return. But the penalties and interest keep accruing. The longer you wait, the more they will be. You should file the amended return as soon as you can to minimize the penalties and interest.
4. An amended return is not a red flag. Not filing an amended return, when income was omitted from your original return, is a red flag. In your case, the amended return is needed.
5. You will owe interest and penalties, but TurboTax cannot calculate the interest and penalties. (Part of the reason is that the amounts depend on when the IRS and the state receive your amended return and payment.) After the IRS and the state process your amended returns, they will send you bills for the interest and penalties.
6. Do not include the $20 of interest on the amended return. You received the interest in 2020, not in 2019. You will report it as income on your 2020 tax return. In January the IRS will send you a 2020 Form 1099-INT for the interest.
7. There is no special rule about filing the amended return before or after the end of 2020. But as I said earlier, the longer you wait, the more the penalties and interest will be. It's the total amount of time that matters, not whether it's before or after the end of 2020.
