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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Re: new 1099 issued... Date: 9/10/2011 5:34 AM
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I need to open my Turbo Tax and revise the 1099 inputs, and then refile.

I'm not nit picking, just trying to get you on track. So, let's use the right words as a starting point. What you must do is amend your 2009 and 2010 returns (assuming you've filed 2010 already). You do this on Form 1040X.

TT can prepare the 1040X for you in a process that is either a breeze or an exercise in torture, depending on whether you know what you're doing. I haven't used TT since the 1040X changed, so I can't help. Just make sure you go through TT's help resources and figure out step by step what it is you do to produce the correct document. And make sure you have a backup of your original before you start.

Am I correct that the monies I get back from this only affect taxable income this year (2011)? Or do I have to move the new 2009 numbers into the appropriate 2010 lines too? My AGI is going to change, and my refund (or amount paid) will also change, and certainly any refunds are taxable the following year. But I'm assuming that since I would be receiving these funds this year that this is when they are taxed. Yes?

No. Well, I'll give you a maybe on a couple of points, but that's possible only because I didn't understand some of it.

Each year stands by itself for a cash-basis taxpayer, so any taxable income you get in 2011 from these filings is taxable in 2011, even if it's from 2009. The Federal is easy. Any refund of tax isn't taxable. Any interest paid by Uncle Sugar is taxable in the year received. If you have a state income tax, this isn't the type of interest paid by the US that's exempt.

The treatment of any state refund of tax is more complicated. It's potentially taxable if you itemized your Federal deductions for the year in question. (In this analysis you look at each year separately.) Pub 525 explains the analysis. If there is a taxable refund of state tax it goes on line 10 of your 2011 1040.

Phil
Rule Your Retirement Home Fool
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