The idea of sending in an "extra payment" to forestall any interest, however, circles back to my original question and is one avenue I'm trying to avoid. In my example, the state owes me a $1000 refund at the end of the day. Until it's done processing and the state has made their "decision" on what they want me to do (which hopefully comes before April 15), I don't feel it would be right to have to pay more into the government and wait further for my refund. At the same time, I don't feel there should be a penalty/interest required if things spiral out of my control; I've recognized the error before the filing deadline, plan on amending as soon as needed, and am trying to be diligent to get this resolved ASAP. It's not like I'm planning to keep the government's $4000 for as long as possible.
Also, in your very first response, you said "TurboTax will assume that you have received the full refund when computing the difference amount to be paid." Is this always the case? Is there an option to file an amended return without making a payment? That way the state would have record that I recognized and amended the error, but they could bill me later after they sort out what I should pay.
I admit I made a big but honest error, but surely there has to be some precedence for this. It can't be that uncommon in a state of ~20 million taxpayers. I'm just thinking out loud. Thank you for all your help!
EDIT: @pk there are 2 more questions you can answer:
1. When filing an amended return with TurboTax, does the software include any penalty/interest as part of the amount you have to pay back? For example, will the software know that it is past April 15 and either know the fees I owe or require me to add them in? If not, maybe there's a possibility I can pay the $4000 back after April 15 without interest if it turns out to take that long?
2. Also, in your very first post you said "TurboTax will assume that you have received the full refund when computing the difference amount to be paid." Is this always the case? When preparing an amended return, is there an option to file it but not send payment? That way the state could have on record that I recognized and amended the error, but I wouldn't have to pay out-of-pocket until they figure it out for me.
