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Author: mawhinney Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121169  
Subject: "09 Tax Error -What to do? Date: 10/16/2011 5:04 PM
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Rec'd letter from IRS on "09 tax error. Either I or TT entered SS Medicare premiums one the wrong line and deducted the premiums as tax witheld. Should I file an amended return as I'm assuming the Medicare B Premiums are a medical deduction? The IRS letter asks for the amount I entered in the wrong box plus a penalty. I'm assuming if the Medicare Premiums are a medical deduction, it may lower what I owe. I will also need to file an Amended State return.
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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: 114184 of 121169
Subject: Re: "09 Tax Error -What to do? Date: 10/16/2011 6:04 PM
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Rec'd letter from IRS on "09 tax error. Either I or TT entered SS Medicare premiums one the wrong line and deducted the premiums as tax witheld. Should I file an amended return as I'm assuming the Medicare B Premiums are a medical deduction?

Yes, you'll need to amend your return to get credit for the Medicare premium deduction on Schedule A. (I'm assuming you had medical expenses in excess of 7.5% of AGI.)

The IRS letter asks for the amount I entered in the wrong box plus a penalty.

"Penalty" is a term of art in this matter. Is it a penalty or is it interest? If it's a penalty, what does the letter say it's for?

Don't race to get that amended return in the mail. Maybe one of the pros knows exactly how the paperwork should flow in a case like this.

Phil
Rule Your Retirement Home Fool

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Author: mawhinney Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 114189 of 121169
Subject: Re: "09 Tax Error -What to do? Date: 10/17/2011 10:46 AM
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It is interest and not a penalty.

When I entered the amount in question on the correct line on the SS Work sheet, TT figured I owe no additional taxes. I did not have enough medical expenses to reach the 7.5% of AGI. I think I will need to amend both federal and state taxes.

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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: 114190 of 121169
Subject: Re: "09 Tax Error -What to do? Date: 10/17/2011 12:36 PM
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When I entered the amount in question on the correct line on the SS Work sheet, TT figured I owe no additional taxes. I did not have enough medical expenses to reach the 7.5% of AGI. I think I will need to amend both federal and state taxes.

There's no need to amend anything. (The only reason to amend was if properly showing the Medicare premiums on Schedule A lowered your taxable income.)

If I understand fully, you claimed your Medicare premiums as tax withheld, and you have a bill for that amount plus interest. Just sign it and send it back with your check in the amount they're asking for. No need to do anything with the state.

Phil
Rule Your Retirement Home Fool

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