Hello all,I just discovered I made an error on my tax return and need some advice.I receive my payslip via the internet, and used my 12/31/2000 information to fill out and file my taxes in January. By the end of the month I had received a nice $7500 refund (6000 Fed, 1500 State) which I put in my money market account and haven't touched yet.I received my W-2 by February 1 and filed it away, figuring I had done everything correctly with TurboTax. Last night I was cleaning up my tax records and decided to open the W-2.I was shocked to discover that the total tax actually withheld was different than how my company showed it on the internet. I called my payroll department this morning and discovered that they are right and I filed the wrong amount of tax withheld. I should get a Federal refund of 3 dollars and owe the State about $350.So my question is, what is the best approach to fix this error? I know I will probably have to file a form 1040X but at the bottom of it there is a paragraph asking why the error occurred. TurboTax offers no advice on the subject.I'm worried about possible penalties for taking Uncle Sam's money and then having to return it. The form doesn't say whether there are any penalties and it doesn't say if I should send a check for the money along with the form? Does the IRS bill me once they receive the 1040X?Any advice would be greatly appreciated, as I don't know how best to proceed.Thanks!
mrnethack,Definitely send a check with the 1040X form. I would attach a letter telling exactly what you told us. I don't think there is a form number for "I messed up". There will probably be some penalties, but wait for them to tell you what they are. They might decide that it is not as bad as you think, or there may not be a penalty if you get it in before the April 15th deadline (or not much of one). Time is of the essence.Beth
So my question is, what is the best approach to fix this error? I know I will probably have to file a form 1040X but at the bottom of it there is a paragraph asking why the error occurred. Explain it the way you explained it here. What I can't figure out is how you got the refund without the W-2. In any event, just send a check along with the 1040X.Phil MartiVITA Volunteer
Explaining the situation is important, too. Because it was inadvertant, you may request that the IRS waive any penalties they assess (although you will probably still be required to pay interest on the additional amount refunded).CPAScott
I don't know why everyone is making such a big deal about this. Prepare the 1040X. For an explanation, all you need to state is that the wrong number was entered on line xx (whatever is appropriate).Send a check for the balance due.If it's done by 4/16, there should be no penalty as it will still be timely filed and paid. Ira