Amending for Nothing


Today TaxMama® hears from bvmite in the TaxQuips Forum with a good question. “After filing 2011 return electronically, I noted that I did not report all IRA and pension rollovers on line 16a. Line 16b, AGI and taxes owed are not affected. Form 1040X, line 1 starts with a change in AGI; and in my case there is none. Should I just write to IRS and explain? Or is there another way to inform IRS?”

Dear bvmite,

Paul Clausen, an Enrolled Agent in Minneapolis, MN provides this guidance. He says, at this point, you could just wait a few months and see if you receive a notice from the IRS.

Presumably, you have a form 1099-R for each rollover. Even though the 1099-R would likely have a distribution code of “G” to indicate that the distribution was a rollover, and therefore not included in taxable income, the IRS would still look for the gross income on the 1099-R (box 1) to be reported (on line 16a). Since the IRS has just started generating income matching letters for tax year 2011, called a CP2000 notice, you may receive one.

If you wait until you receive such a notice, you can then follow the steps to respond, and in your reply, include your explanation of your error. That explanation, possibly including some supporting documents to substantiate the completion of the rollover, should be all that is necessary. When the IRS accepts your explanation, you can consider the issue resolved.

TaxMama® adds these suggestions – If you don’t get the notice within 18 months after you filed the original tax return, DO file an amended return.  You’re talking about a significant amount of money, and it could keep your tax return open for 6 years instead of 3.

How do you prepare this amended return? You prepare the amended return just as you would any other.  Yes, the overall totals won’t change. BUT, there is a comment area. That’s where you explain about the rollover and attach proof of funds out and the funds going back to the new account.  That’s all there is to it.

You can even say, “See statement attached” and explain in more detail. Still, include the proof that the distributions were rolled over.

And remember, you can find answers to all kinds of questions about amending tax returns and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

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