Didnt include ESPP info on 15 and 16 return. IRS sent Bill for tax on full value of sold stock (not gains). I paid it. How do I get $ back?

[jeffcrawley]

If I file an amendment for those years, will the IRS see the extra payments and return the appropriate refund?

[macuser_22]

Did the IRS letter tell you to amend?   The letter should tell you what to do to dispute the tax and if not it should have a number to call for more information.  Usually just sending the proper documentation to the address on the letter will clear it up.    If they want you to amend then they will probably give you a special address to mail the amended returns to so they can be associated with the letter.

[jeffcrawley]

It said to file an amendment if we wanted to dispute - of course the deadline in the letter has long since passed  We didn't understand the issue at the time and simply paid the bill.  The only thing that is actually wrong is that the employer contribution  for the ESPP was not included in the cost basis.  It was on the W2 and included in my original income.

[macuser_22]

Without the cost basis they will tax you non the entire amount if you did not report the sale on a schedule B.

It would probably be worth it to amend, however, an amended return with a schedule B reporting the sale of the stock only showing the capital gains after entering the basis, would result in the correct tax to be paid with the amended return.

Since you already paid *all* the tax with the letter,   I am not sure how to go about accounting for the tax that you paid to get a refund.   That is why the amended returns should have been sent to the address on the letter while the case was opened so the amended returns and the letter would offset each other.

I can only suggest calling the IRS on the number in the letter and ask them how they want you to do it.

[jeffcrawley]

Thank you

[macuser_22]

I asked some others if they know how to add the tax paid via the letter to the amend return so you get a refund rather than additional tax to pay.

[rjs · Accepted solution]

You get the extra payment back by including it on Form 1040X line 16. If you are using TurboTax to prepare the amended returns, the payment can only be entered in forms mode. Since you are amending past years, you have to be using the CD/Download TurboTax software, which has forms mode. Prepare the amended return, but don't print it yet. Then click the Forms icon at the top right to switch to forms mode. In the list of forms on the left side, click on Form 1040X to open it. Scroll down to the Payments section. Between lines 15 and 16 there is a box called "Original 2015 Return Payments Smart Worksheet." (The year will be whatever year you are amending.) Enter the amount that you paid on line C of the Smart Worksheet, which has the description "Additional tax paid after return was filed." The payment will then appear on line 16, or be added to any amount that was already on line 16. Lines 21 and 22 will now show your refund. Now you can go back to Step-by-Step mode and print the amended return.

If you are preparing the amended return by hand, just include the additional payment in the total amount paid on Form 1040X line 16.