How to handle employer income tax reimbursement check to the IRS

[dac10012]

My wife's international employer provides reimbursement for her income taxes in the form of a check made out to the IRS. How do we enter the check in TT, MFJ, so that it pays for some of our taxes owed and we can also debit the balance to our joint checking account? Also, I assume we can e-file and send the check to the IRS?

[DaveF1006]

This is a difficult situation for you because your employer made out the check to the IRS and not to you. As a result, they haven't received payment yet. There is no way you can attach this check to your return if you file electronically so you need to print and mail in your return with the check and a letter of explanation on why the check is included. Here is how to report on your return so there won't be any questions or "flags" in your return.

1. Go to Deductions & Credits > Estimates and Other Taxes Paid. 
2. Select Estimated Tax Payments.
3. Enter the check amount as a Federal payment. (It doesn't strictly matter which "quarter" you pick, but "4th Quarter" is most common for year-end reimbursements).

I have read that you should mail the check and then efile immediately after mailing. I don't recommend this procedure because it may take time to process your check.  In the meanwhile since you efiled, the IRS may be looking for that estimated tax payment that never arrived until they got around to processing it. You may not  want to take this risk unless you are a risk taker.

Instead, print and mail your return. Make sure you put your name(s) and SSN(s) on the check just in case it gets separated from the rest of your return when it is received by the IRS. Once your return is complete and printed, you will mail your return in accordance with the filing and mailing instructions included in your TurboTax forms.  

When you mail your return, Use Certified Mail: Since this is a high-value third-party check, mail it via USPS Certified Mail with Return Receipt. If the IRS claims they never got it, this receipt is your only proof of mailing. 

Make sure you keep all copies of your return, including the check and letter of explanation for future reference. 

[dac10012]

Coincidentally, I spoke to a Tax Expert at TurboTax today. They said:

Under Estimated Tax Payments, use Additional Payments (vs. Quarterly Payments) for the checks from the UN, and enter the amounts under Federal, State and Local.  What do you think?

They didn't say I should write a letter of explanation to the IRS or NYSDTF but I think your suggestion is sound.

I am mailing both returns, so I think I should include a 1040-V and IT-201-V payment voucher for each check from the UN and me (for the balance owed). What do you think?

Yes, I am mailing Certified Mail, Return Receipt.

Thanks for all your great advice, much appreciated.