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Greetings Fools~

This may be an overly simplistic question for the level of expertise on this board, but I'm hoping to get some reassurance that I'm thinking about this correctly. My wife and I thought we were all on top of things and filed our taxes early this year, thinking that we had all the forms we needed. Literally the afternoon after we e-filed, we received an unexpected 1099-MISC which was not included in our reported income. Thus, we accidently overstated the refund we were due. Our return has since been accepted by DC, MN, and the IRS. I know that I need to file amended returns to all three, and that we will need to pay the difference to the IRS and states.

My question is this: assuming we file our amended return by the April 15th deadline and pay the difference we owe, do we face any penalties, interest, or any other punishment? I'm thinking of waiting until mid-March to do this in case we get any other corrected forms in the meanwhile, but is it frowned upon to be holding on to that extra cash we got back that we didn't deserve until I do so? Should I be contacting the IRS and DC/MN Departments of Revenue immediately to let them know what's up? I certainly don't want to do anything illegal or to irk the IRS.

Naturally, I made this mistake the year that I got married, moved between states, and became a full-time student again :-).

Thanks,
~X
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If you file the amended returns by their due dates there should be no penalty or interest.

Dusty
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assuming we file our amended return by the April 15th deadline and pay the difference we owe, do we face any penalties, interest, or any other punishment?

Without more details this answer speaks in generalities. Yes. There will be an 8% simple interest penalty for underpaying your taxes from the date a quarterly installment was due for this income until you pay it. This presumes the 1099 was for a large amount of taxable income you didn't report and with the refund increases your tax due to more than $1,000.

ed
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A couple comments. I do not believe that you can e-file an amended return. Even though the returns have been accepted, the states and the IRS need time to work them through the system. If you send an amended return before the original return is processed, you risk confusing them.

How much income is reported on the 1099?

Debra
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It was around $1,000. To confuse things even more, it was a grant from Americorps as part of an education award that went directly to a college to pay tuition and fee expenses. Because we never actually received a check, we didn't think to wait for a 1099-MISC before filing.
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...My question is this: assuming we file our amended return by the April 15th deadline and pay the difference we owe, do we face any penalties, interest, or any other punishment? I'm thinking of waiting until mid-March to do this in case we get any other corrected forms in the meanwhile, but is it frowned upon to be holding on to that extra cash we got back that we didn't deserve until I do so? Should I be contacting the IRS and DC/MN Departments of Revenue immediately to let them know what's up? I certainly don't want to do anything illegal or to irk the IRS. ...

I was in a similar situation a few years back, and I don't think you'll incur the wrath of either the IRS or Minnesota (not familiar with DC, though). I think your plan to wait until mid-March to send amended Federal and Minnesota forms along with checks covering the excess refund amounts will work out just fine with no penalties. After all, you will be fixing the error prior to the tax due date, April 15, 2008.
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It was around $1,000. To confuse things even more, it was a grant from Americorps as part of an education award that went directly to a college to pay tuition and fee expenses. Because we never actually received a check, we didn't think to wait for a 1099-MISC before filing.

It is sufficient to file amended returns. I missed a $50 1099 one year and just waited for it to be found and be billed.

I still recommend a little patience before filing the amended returns. Once you receive the refunds, you will know that the returns have been processed.

Debra
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