Getting notice from IRS I owe taxes after filing with Turbo Tax

[stdenism]

I had to file an amended return because I forgot about an early 401K withdrawal I took in January 2018. The gross amount was only $2600. I had taxes deducted on the 1099 plus more deducted when I did the amended return on Turbo Tax and I ended up paying back about $260 after initially receiving a $1500 refund. Now I'm getting mail from the IRS saying I owe another $597 which matches exactly the tax that was withheld on my 1099-R. I am working on writing a letter to the IRS explaining this and sending it to them certified. Any other suggestions? 

[Anonymous]

i can understand the withholding shown on the 1099.   you state "plus more deducted when I did the amended return"   This does not seem possible, so could you please clarify this.   

on an early withdrawal of $2,600 you would owe a penalty of 10% or $260.   in addition you would owe ordinary income taxes less what was withheld.   in addition there would be late payment penalties and interest if you file the amended return after 4/15/19 

we can't see your return or amended return so we can't say if additional income would affect other items on your return such as credits, itemized deductions, etc. 

it is entirely possible you are right and the IRS made an error when process the 1040-X.  however,  1st i would check the submitted return to make sure everything is correct.   next I would download a transcript of the return from the IRS website and compare it to the 1040-X to verify that it is an IRS error rather than an entry error you made.  

[Anonymous]

also

If you purchased Audit Defense:

https://ttlc.intuit.com/questions/2924451-i-bought-max-or-audit-defense-and-now-i-m-being-audited

AUDIT SUPPORT

https://support.turbotax.intuit.com/irs-notice/audit-support/

[stdenism]

Thanks for the reply. Sorry what I meant was that on the amended return, Turbo Tax added in the 10% penalty in addition to the withholding on the 1099. So between the increase in tax due to increased income and the penalty I owed $832. $597 was paid on the 1099 so that leaves $235, which I paid.

Basically i received a refund of $1531 initially and then when i filed the amended return, it said I owed back $235, which I paid. Then in July I got a bill in the mail for $597 plus interest and penalties. I called the IRS and spoke to a lady who agreed it looked like there was an error but said processing was probably still going on and it will likely work itself out. She put my account on a 30 day hold. Then I got another notice saying I need to pay. When I looked up my amended return status online it says completed as of 7/12 so I don't think they're reviewing anything else.  I sent off my amended return a few days late on 4/25, it was received by the IRS on 4/30.

 As far I can tell i submitted the info correctly because thats how turbo tax calculated the $235 i had to pay. I've broken down the numbers using the tax table and as far as I can tell, I have paid and they did not account for that withholding on the 1099. i am just hoping they will acknowledge and respond to the letter i'm going to send. i'm not sure how else to alert them of the error since calling them apparently did not do the trick.  Also the hold times are insane. 

[stdenism]

I did check out my Record of Account and they don't show the $597 as 1099 withholding. It was definitely on the form I submitted. I'll be sending them another copy. 

[Critter]

A copy of the 1099-R should have been attached to the amended return ...  even if you did they obviously missed the entry so you are correct in responding to the notice politely and ask them to please review the 1099-R for the missing withholding ... if you call the number on the notice you may be able to resolve this over the phone or by faxing the form to them.  

[dmertz]

I think that the letter that you are drafting is the appropriate response.

Check the Form 1099-R in your Wage and Income Transcript to see if the $597 is present for box 4 Tax Withholding.  The Record of Account combines only your Account Transcript and your Tax Return Transcript, so not all of the necessary information is there.  The Tax Return Transcript will only show what you reported on your on your original tax return, it does not get updated to show the results of any amendment.  (I don't know how the tax withholding might appear in your Account Transcript.  Being self-employed, the only tax payments I make are estimated tax payments, so I have no tax-withholding record for comparison.)

Amendments are processed by people at the IRS and people make mistakes.  It seems that you correctly prepared the amendment [assuming that you attached the Form 1099-R to the amendment as Critter indicated above] but the individual processing the amendment failed to recognize that the originally omitted Form 1099-R had tax withholding that needed to be considered or the payment made with the amendment got processed but the amendment itself has not yet been processed.  Check the status of your amendment here:

https://www.irs.gov/filing/wheres-my-amended-return

($597 is a bit of an unusual amount of withholding on a $2,600 taxable distribution.  The mandatory minimum withholding is 20% and would have been $520.  If you requested withholding above that specified as a percentage, an additional 3% would have been $78 for a total of $598.)