My 2021 tax return was audited in 2023 due to an error in my not reporting a capital gains amount. During the audit I made a $500 tax payment to the IRS in 2023 to offset any additional taxes due to the error on my 2021 return. After they completed the audit the IRS kept $369 for the tax due on the capital gains error and returned the remaining amount to me.
Do I need to report the additional $369 on my 2023 tax return? And if so where do I report it in Turbo Tax?
Taxes owed and paid for a prior tax year are not reported on a tax return. The funds returned to you by the IRS are not reported on a federal tax return.
No, do not report the tax you paid for your 2021 tax return on your 2023 taxes. Consider 2021 as a closed book, not affecting 2023.
You did say that you put $500 in to cover the 2021 taxes included a refund back to you.
No. Federal tax that you paid is not deductible. You do not enter it on your 2023 federal tax return . There are a handful of states for which you can enter federal tax you paid:
Alabama, Iowa, Missouri, Montana, and Oregon. If you are filing in one of these states watch for the deduction when you prepare your state return.
Yes I paid the IRS $500 in 2023 to cover the tax due in 2021. They kept $369 and refunded me the difference.