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I already received my refund, but my self-employed friend filed an extension because she does not have the funds to put into her SEP yet. In discussing her situation, two questions arose.

1) How do you properly account for a MSA? She thinks you can deduct only the amount reimbursed from the MSA, but I thought it was the amount contributed, like my FSA. If you had additional out-of-pocket medical expenses, are they also deductible?

2) My friend thinks her tax preparers never deducted for the new car she purchased 3 years ago. She drives it about 10-20% in her business. Her tax preparers told her the deductions were too insignificant to warrant the cost of filing an amended return for those years. I did not think it cost anything to file an amended return (unless it is the tax preparers who want to charge for it, in which case could I not use my Turbo Tax to help her?)
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Item 2)

It is to late to file for a federal refund from 1999 or earlier. Every state has its own rules.

She should discuss the fee with her preparer. She was responsible for checking her return for errors but if the information was provided and not included then the fault is shared. Since there are no penalties involved and some of the deduction has been lost, there is room for discussion on the fee.

Amended returns require 1040X. I believe, TurboTax only handles form 1040 and its schedules. Check before assuming TurboTax will help.

Debra
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Amended returns require 1040X. I believe, TurboTax only handles form 1040 and its schedules. Check before assuming TurboTax will help.

All of the consumer tax software packages can prepare a 1040X. However, the task is somewhat more complicated when the original return isn't in the software's data file format already.

Ira
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I figured we would take the return filed and enter the numbers directly into the TT 1040 forms instead of going through the interview.
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<<All of the consumer tax software packages can prepare a 1040X. However, the task is somewhat more complicated when the original return isn't in the software's data file format already.

Ira >>

Out of curosity I checked TurboTax's website. It is not obvious information on the website but as Ira stated, TurboTax does handle amended returns. Each years product is capable of handling amended returns for that year. If amended returns are to be filed for 2000-2002, then all 3 years of TurboTax are needed.

Debra
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Out of curosity I checked TurboTax's website. It is not obvious information on the website but as Ira stated, TurboTax does handle amended returns. Each years product is capable of handling amended returns for that year. If amended returns are to be filed for 2000-2002, then all 3 years of TurboTax are needed.

This isn't correct. Any year's program can prepare a 1040X for that year or earlier years. As I posted before, the process can be tricky if you don't have the original return in a TurboTax data file. You should be certain you understand the process of preparing an amended return well enough to know whether the program is preparing it correctly or not.

Ira

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<<This isn't correct. Any year's program can prepare a 1040X for that year or earlier years. As I posted before, the process can be tricky if you don't have the original return in a TurboTax data file. You should be certain you understand the process of preparing an amended return well enough to know whether the program is preparing it correctly or not.

Ira >>

I should have checked additional links on the website. You are correct. It is possible from any version. It is only strongly recommended to use Turbo Tax for the correct year.

Debra
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If amended returns are to be filed for 2000-2002, then all 3 years of TurboTax are needed.

This isn't correct. Any year's program can prepare a 1040X for that year or earlier years. As I posted before, the process can be tricky if you don't have the original return in a TurboTax data file. You should be certain you understand the process of preparing an amended return well enough to know whether the program is preparing it correctly or not.


It's not often that I disagree with Ira, but there's no way I'd try to do an amended 2001 return through any program other than a 2001 program, regardless of the fact that it can be done.

Every program I've ever used handles amended returns the same way:

1. Create a correct return.
2. Open the 1040-X and input the numbers from the original return.

Without the program for the year being amended, all entries and calculations other than addition and subraction would have to be manual, in which case I think it's easier to just get the blank form and do it.

Phil
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Every program I've ever used handles amended returns the same way:

1. Create a correct return.
2. Open the 1040-X and input the numbers from the original return.


It's not often that I disagree with Phil Marti, but that's not the way TaxWise (the program that many TCE/VITA sites use) works!

TaxWise does amended returns like this:

1. Create an incorrect return.
2. Open the 1040X and check a box to lock in those numbers.
3. Go back to the return and fix it.
4. Return to the 1040X - all the numbers are now there, and all that remains is to add narrative text to the second page.

;)

Lorenzo
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pmarti: Every program I've ever used handles amended returns the same way:

1. Create a correct return.
2. Open the 1040-X and input the numbers from the original return.


lorenzo2: It's not often that I disagree with Phil Marti, but that's not the way TaxWise (the program that many TCE/VITA sites use) works!

TaxWise does amended returns like this:

1. Create an incorrect return.
2. Open the 1040X and check a box to lock in those numbers.
3. Go back to the return and fix it.
4. Return to the 1040X - all the numbers are now there, and all that remains is to add narrative text to the second page.


me: TurboTax does it both ways. You get to choose. All this desagreeing aside, I agree with Phil that if I didn't have the "matching" year's software available, it would probably be easier (and safer) doing the 1040X by hand. My purpose in correcting the original poster was just to point out the error, ie., that it was possible to prepare the return with software from a later year, not to suggest that using the software was the preferred method.

Ira
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TaxWise does amended returns like this:

1. Create an incorrect return.
2. Open the 1040X and check a box to lock in those numbers.
3. Go back to the return and fix it.
4. Return to the 1040X - all the numbers are now there, and all that remains is to add narrative text to the second page.


It also does it like this:

1. Create a correct return.
2. Open the 1040X and click the "override column a" box.
3. Input the column a figures from the original return.

To me that's easier than creating a bad return and fixing it, but to each his own.

My point, however, was that neither of our methods works for amending a 2001 return if you're using 2002 software.

Phil
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To me that's easier than creating a bad return and fixing it, but to each his own.

Ah - I didn't know you could do it your way. That's why you're the Master and I'm the Grasshopper.

But your point about using year X software to fix a year X return is well taken. Maybe the software is smart enough to have previous year's numbers built in (amounts for standard deduction, exemptions, various phase-out thresholds, and tax tables!) - but you sure would be well advised to check closely.

Lorenzo
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