@johnf2 wrote:
The taxpayer asked how to amend the return. My instructions on how to amend are correct.
Right. But if you enter a 1099 for a fire relief payment, and change the amount from $X,000 to zero, that's going to get you an automatic IRS letter and will delay processing of the amended return. The taxpayer needs to acknowledge the 1099 and explain why it is wrong or not taxable.
Now, as an option, if this amended return will be mailed (too old to e-file) the alternative procedure would be to delete the 1099 from the return entirely, then attach a copy of the 1099 to the amended return along with a written explanation of why it is not taxable.
You can't just zero out the 1099. The state of California issues all kinds of 1099s for all kinds of payments, and the IRS has no way of detecting that a particular payment is a non-taxable fire relief payment. If you just zero out the 1099 and don't acknowledge it, the IRS will only see that you are failing to report income, and they will send a letter asking for an explanation. If you include the 1099 and also include a negative adjustment, that is where you make the explanation. (Or delete the 1099 but attach a separate written explanation.)
