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In looking through my taxes for 2012 I realized I have made a few errors for 2011.

For 2011 taxes:
- I did not include the mortgage interest I paid on a HELOC
- I did not list the tuition I paid for my masters degree classes
- I did not include car registration fees or excise tax

Based on amending those items in Turbo Tax for 2011 it looks like I may be due a refund of an additional $500 or so.

I'm also questioning the interest on my first mortgage--for 2011 I put down that I paid $10,077. But for 2012 my bank's statement says that I paid $10,700. The principal on the mortgage is decreasing, and the rate is fixed... so I don't understand how I could have paid less interest in 2011 vs. 2012? I'm starting to wonder if I accidentally entered $10,077 when it fact it may have been $11,077? (it was a manual process from a 1099-INT, was not imported). If I did make an error here it would be another $300 or so back to me.

My question is... how difficult is it to file an amended return? I filed electronically last year, so I provided no paperwork or receipts. Assuming that I can find all the required receipts/paperwork they need with the amended return, does this typically "wake the sleeping giant", or is it a fairly common thing?

I don't need the $500-800, but if doing 2-3 hours worth of paper work can get it, I certainly will do it as long as it doesn't open a can of worms.
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My question is... how difficult is it to file an amended return? ...does this typically "wake the sleeping giant...."

Here's my experience--a single data point. I had occasion to file an amended return a couple of years ago. Mechanically, the hardest thing about it was figuring out how to get TaxAct to do this (no knock on TaxAct; I'd just never done one before).

I also knew when I filed the original that I'd have to file amended later: one of the companies in which I'd invested wasn't going to send its K-1s until early summer, and I didn't want to wait that long to file (or go through the drill of getting the extension). I didn't worry about this for two reasons: I was going to get a refund, and the K-1 was going to reflect chump change income for me (based on the company's interim postings on its Web site) that would only reduce my refund.

The K-1 came, I filed amended, sent a check for what I owed (that refund reduction), and in short order got a response from the IRS that everything was jake. They did note that I owed roughly two bucks in interest, and they waived that.

As an aside, I've seen lots of complaints (often anticipated complaints, nothing actually had happened) that the IRS are a bunch of a**h...s bent on ripping us off. That's not been my experience. My wife or I have sat through in-person and mail audits, and we've gotten multiple heart-stopper letters (of the "we think you owe, please pay" variety). In every case, the men and women were courteous and professional--which I cannot say, from direct experience, about other groups (IT customer "support," for instance). We've always been straight with them, and they've always been straight with us.

Eric Hines
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My question is... how difficult is it to file an amended return?

Piece o' cake.

I filed electronically last year, so I provided no paperwork or receipts.

Nor should you have if you filed on paper.

Assuming that I can find all the required receipts/paperwork they need with the amended return, does this typically "wake the sleeping giant", or is it a fairly common thing?

While you can't file a Federal amended return electronically, the only paper you need in your case is Form 1040X and an amended Schedule A. You will need to locate your 1098's for the mortgage interest, but that's just because you don't know what one number is (first) and you need to know whether or not the HELOC interest was reported on a 1098.

Your software will prepare the necessary forms, but make sure you save a copy of the return as it was originally filed before you start changing it.

As for waking the giant, he's already awake, as you'll find while it takes a lot of time for them to process the amendment. That's because they have so many of them. And don't forget your state once you've done the Federal.

I don't need the $500-800

My address available on request.

Phil
Rule Your Retirement Home Fool
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In every case, the men and women were courteous and professional--which I cannot say, from direct experience, about other groups (IT customer "support," for instance).

The IRS just has to cope with incomprehensible law, courtesy of the Fools on the Hill. Tech support has to deal with endless calls, half of which can be resolved by asking "Is it plugged in?" and "Is it turned on?" I have to admit to snapping a couple of times when I did tech support.

Phil
Rule Your Retirement Home Fool
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"Is it plugged in?" and "Is it turned on?" I have to admit to snapping a couple of times when I did tech support.

Phil
Rule Your Retirement Home Fool

http://blogs.computerworld.com/blog/shark-tank


Having worked tech support, you may find the IT support stories at the above link entertaining.
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I've filed amended federal returns twice in the last decade. In both cases I had additional refunds coming. It's not that hard and they were processed quicker than I expected. In the first instance I also filed an amended state return, which took 7 months to clear even though my state won't even accept an amended return until the feds have accepted theirs. In the second instance my additional state refund would only have been $5. I just let the state keep it. If you owe money you don't have a choice. File both federal and state.
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A follow-up question....

I double checked the 2011 1098 for my first mortgage. It does indeed say I paid $10,077.39 in interest. I could not let this go however because it makes no sense that my interest was that low given the rate and principal I owed.

I dug deeper and found a year to date activity statement for my mortgage which reflects something odd... my first payment of 2011 was actually posted on 12/31/2010 (I always mail it early). They have a footnote that says that the interest for this payment is "not reportable this year". It was $924.37, so probably about $175-200 back to me if it had been deducted properly.

I bought the house in mid-Nov 2010. I checked my records for 2010 tax year and found that I apparently did NOT receive a 1098 from the bank for 2010. I made a note in the margins of my copies of the tax return stating that the mortgage interest value I entered was "no 1098, this is conservative estimate".

So my question now is--
If I wanted to recover this interest payment as a deduction, would I attempt to argue that it was actually a 2011 payment (i.e. report an interest paid number that does not jive with the 2011 1098 and say that the 1098 is incorrect) or would I try to file an amended return for 2010, which apparently had no 1098?
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I have no excuse for this one: Digging around I found my 2010 1098--the one I supposedly did not receive...... My best guess here is that I may have completed my taxes before this form arrived and when it finally did a arrive, and with a value higher then I had put, I decided to just roll with it at the time (and also at the time did not know that my first payment of 2011 had posted early and would not be counted toward 2011 interest).

The 2010 1098 reflects $1355.75 in interest paid (I had estimated $1300).

I don't have a break down of the amount, but I closed on my loan on 11/17/2010. That number looks very much like about 1-1/2 months worth of interest at my rate of about $925/mo in interest at the time, which would mean it's for the half November and full December of 2010.

So somehow that first payment of 2011 seems to be "lost"? ... it apparently wasn't included in the 2010 1098 and definitely wasn't included in the 2011 1098.

I may just let this one go unless you folks have any advice.
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Would interest paid in escrow explain the difference from the 1098?
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Here's the deal on your mortgage interest.

Mortgage interest is paid in arrears. That is, you pay it after it has accrued. The one exception is at the time of purchase. Then, you typically prepay the interest through the first of the following month.

So at your closing in November 2010, you prepaid interest for the time from closing to the end of the month. You next payment was due 1/1/ 2011 and paid the interest for the month of December.

You sent that payment in early and it was received before the end of December. Because you are on the cash basis of accounting, you deduct expenses when you pay them and not when they accrue. So for 2010, you paid the partial month of November interest at closing, and you paid the December interest at the end of December.

In 2011, your monthly interest for each month was due on the first of the following month. Assuming that you made your Feb 1 through Dec 1 payments on time (more or less), we know that those 11 months of interest were paid during 2011.

It would appear that you made your 1/1/2012 payment on or just after Jan 1. That would put the payment into 2012 and make it deductible then. So your 2011 1098 reflects the 11 month's of interest you paid during 2011.

Now in 2012, we continue to follow the same process. This time, you'll have your 1/1/12 through 12/1/12 payments for sure. That's 12 payments this time. And your 1/1/13 payment may have been made early enough to include in in 2012 as well. That could give you 13 payments on the 1098.

--Peter
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(Eric Hines:)I also knew when I filed the original that I'd have to file amended later: one of the companies in which I'd invested wasn't going to send its K-1s until early summer, and I didn't want to wait that long to file (or go through the drill of getting the extension). I didn't worry about this for two reasons: I was going to get a refund, and the K-1 was going to reflect chump change income for me..
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Editorial comment: OK, your choice, but I'd suggest for most people that it's a lot less work to get the extension, whether you have to pay or not, than to do an amended return.

Bill
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Peter did a nice job of explaining things. I'll only add this. If you find you paid next year's interest in December and the bank doesn't show it on the 1098 you can still include it in itemized deductions. Just be sure you have some evidence of the early payment, such as a bank statement showing your check cleared in December. You'll probably get an inquiry someday from the IRS about the discrepancy between your deduction and the 1098. You merely have to explain it and provide your evidence. However, be sure the following year to deduct the previously claimed interest from the amount on the 1098.
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Thank you Peter!!

What I'm taking away from your explanation--and I may be wrong--is that the 1098's I received for 2010, 2011, 2012 appear to be correct...

Under normal circumstances, given my situation, I would have seen the following--
2012 ... 12 months of interest paid
2011 ... 12 months of interest paid
2010 ... 1/2 month of interest paid


But this is what I actually had--
2012 ... 12 months of interest paid (all payments fell within the month they were due)

2011 ... 11 months of interest paid (first payment of the year was actually early and credited towards previous year)

2010 ... 1-1/2 months of interest paid (because I inadvertently paid first payment of 2011 too early).

Net result is essentially the same however, and I didn't "miss" any deduction...
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Net result is essentially the same however, and I didn't "miss" any deduction...

I think you've got it. And that would be my initial take on things - that no deductions were missed.

Most of the time, most banks get most 1098s correct. That leaves room for errors, as they are going to happen.

Now that you're armed with some knowledge, you can figure out if there are errors on your own 1098.

--Peter
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as soon as I get the amended K1, I amend my return and never had a problem.
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