"(1) file the amended return now and include a check for the additional taxes (and then cash the original refund when I get it)?"
Yes, amend now.
The reason is that amended returns are taking forever to process, so your original return will likely be processed by the time your amended return gets looked at.
Besides, the IRS says (about a 4464c letter):
"
If you filed a return
- You don't need to take any action. Please do not call us until 60 days after the letter date and only if you haven't received your refund or heard from us by then.
- We recommend you review your return for any errors and file a corrected or amended return to correct the information.
"
Review the letter carefully and see if there are any instructions about amending your return or if they want you to send or fax the amended return to them. It's likely they want you to amend it the normal way, but you should do whatever the IRS letter asks you to do.
P.S. the amended return will assume that you will receive your original refund, so pay whatever the 1040X tells you to - it is assuming that you have gotten or will receive the original refund.
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