Already filed taxes, didn't include small amount of interest income

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Topic Author
neuro84
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Already filed taxes, didn't include small amount of interest income

Post by neuro84 » Tue Feb 02, 2016 6:24 am

Hi Bogleheads,

In 2015, my wife and I gradually started incorporating some of the sound advice here, including starting an Emergency Fund at Ally Bank. I'm a medical resident and I had a lighter month in January, so I worked on getting all our taxes done early so that I wouldn't have them hanging over me in Feb/March (which are busy months for me). I was especially proud of myself for navigating my wife's 403b-to-Roth IRA conversion and we did pay income taxes on the conversion.

I filed with TurboTax last week, and TurboTax informed me my returns had been accepted (Federal and State) on Friday. Then, yesterday (Monday) I came home to find one more tax document in the mail: our Ally Bank interest income! I had totally forgotten about this income source. In 2015, we earned about $20 of interest from our EF savings with Ally. I did not report this on my taxes. My OCD kicked in and I started to feel anxious about an audit. Few questions:

1) Is there a way to retroactively add this to my taxes after I've already filed?
2) If there is such a way, should I go through the trouble of doing this, for $20 in income?
3) How likely am I to be audited by the IRS if I don't correct the omission?

Thanks in advance for any advice.

Teague
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Re: Already filed taxes, didn't include small amount of interest income

Post by Teague » Tue Feb 02, 2016 6:29 am

neuro84 wrote:Hi Bogleheads,

In 2015, my wife and I gradually started incorporating some of the sound advice here, including starting an Emergency Fund at Ally Bank. I'm a medical resident and I had a lighter month in January, so I worked on getting all our taxes done early so that I wouldn't have them hanging over me in Feb/March (which are busy months for me). I was especially proud of myself for navigating my wife's 403b-to-Roth IRA conversion and we did pay income taxes on the conversion.

I filed with TurboTax last week, and TurboTax informed me my returns had been accepted (Federal and State) on Friday. Then, yesterday (Monday) I came home to find one more tax document in the mail: our Ally Bank interest income! I had totally forgotten about this income source. In 2015, we earned about $20 of interest from our EF savings with Ally. I did not report this on my taxes. My OCD kicked in and I started to feel anxious about an audit. Few questions:

1) Is there a way to retroactively add this to my taxes after I've already filed?
2) If there is such a way, should I go through the trouble of doing this, for $20 in income?
3) How likely am I to be audited by the IRS if I don't correct the omission?

Thanks in advance for any advice.
1. Sure, file an amended return if you want. TurboTax has a mechanism for this and it's not hard.
2. I don't think I would, but if you have some dead bodies buried in that return things might be different.
3. Absolutely no idea. But I'd suspect they have better things to do.
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kenner
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Re: Already filed taxes, didn't include small amount of interest income

Post by kenner » Tue Feb 02, 2016 6:33 am

https://turbotax.intuit.com/tax-tools/t ... 12058.html

The above link may be of interest if filing an amended return is deemed to be advisable.
Last edited by kenner on Wed Feb 03, 2016 1:42 am, edited 1 time in total.

Topic Author
neuro84
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Re: Already filed taxes, didn't include small amount of interest income

Post by neuro84 » Tue Feb 02, 2016 7:04 am

Thanks for the replies. No dead bodies, just a busy schedule and I'd rather not go through the headache of an audit.

I will look into filing an amendment. Sorry for asking something I probably should've figured out on my own!

tdogz
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Re: Already filed taxes, didn't include small amount of interest income

Post by tdogz » Tue Feb 02, 2016 7:34 am

I would file an amended return. It is only a small amount, but remember that Ally filed a copy of that 1099-INT with the IRS too. It will probably stick out like a sore thumb when you don't have an amount on the interest income line that matches the 1099s they received from the bank(s).
And don't forget to amend your state return too.

protagonist
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Re: Already filed taxes, didn't include small amount of interest income

Post by protagonist » Tue Feb 02, 2016 8:13 am

tdogz wrote:I would file an amended return. It is only a small amount, but remember that Ally filed a copy of that 1099-INT with the IRS too. It will probably stick out like a sore thumb when you don't have an amount on the interest income line that matches the 1099s they received from the bank(s).
And don't forget to amend your state return too.
I agree with this. But ultimately, though I am not a tax lawyer and can't claim expertise, I sincerely doubt that an honest mistake like that will trigger an audit . Most likely if you do nothing, you will receive a letter from the IRS sometime in the future stating that you underpaid your tax by a couple of bucks and they will demand payment, which will just amount to mailing in a check. So whether or not you file an amended return, I wouldn't worry too much. It has happened to me a number of times in the past. The percentage of tax returns that are absolutely accurate in the general population is way lower than you think.

In other words, unless you did something else way worse than overlooking a little income, don't lose sleep over it.
Last edited by protagonist on Tue Feb 02, 2016 8:28 am, edited 2 times in total.

retiredjg
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Re: Already filed taxes, didn't include small amount of interest income

Post by retiredjg » Tue Feb 02, 2016 8:27 am

I think you are going to have to deal with it at some point. You will likely not get audited, but you almost certainly will get one of those letters that indicate "something is amiss and would you please explain or pay".

I don't think the IRS considers small mistakes worth investigating through the audit process. They are very quick to send those letters to get discrepancies fixed though.

So fix it now or fix it later, your choice. You might wait a few weeks or until April to see if something else shows up.

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JamesSFO
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Re: Already filed taxes, didn't include small amount of interest income

Post by JamesSFO » Tue Feb 02, 2016 8:33 am

In the past when I had late arriving materials (e.g. K-1 I wasn't expecting) but value was under like $25, my CPA just reported it the following year... Amendment is the fully proper choice, but for such a small amount the time spent amending exceeds the taxes, etc.

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Toons
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Re: Already filed taxes, didn't include small amount of interest income

Post by Toons » Tue Feb 02, 2016 8:36 am

protagonist wrote:
tdogz wrote:I would file an amended return. It is only a small amount, but remember that Ally filed a copy of that 1099-INT with the IRS too. It will probably stick out like a sore thumb when you don't have an amount on the interest income line that matches the 1099s they received from the bank(s).
And don't forget to amend your state return too.
I agree with this. But ultimately, though I am not a tax lawyer and can't claim expertise, I sincerely doubt that an honest mistake like that will trigger an audit . Most likely if you do nothing, you will receive a letter from the IRS sometime in the future stating that you underpaid your tax by a couple of bucks and they will demand payment, which will just amount to mailing in a check. So whether or not you file an amended return, I wouldn't worry too much. It has happened to me a number of times in the past. The percentage of tax returns that are absolutely accurate in the population is way lower than you think.

In other words, unless you did something else way worse than overlooking a little income, don't lose sleep over it.
:happy
I agree with protagonist on this.
Small amount of money to trigger an audit.
IRS may catch it and send you and a notice.
Having said that,I do recall sending in an amended return for a 100 dollar error. :happy
Last edited by Toons on Tue Feb 02, 2016 1:21 pm, edited 1 time in total.
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JW-Retired
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Re: Already filed taxes, didn't include small amount of interest income

Post by JW-Retired » Tue Feb 02, 2016 9:06 am

neuro84 wrote:
I filed with TurboTax last week, and TurboTax informed me my returns had been accepted (Federal and State) on Friday. Then, yesterday (Monday) I came home to find one more tax document in the mail: our Ally Bank interest income! I had totally forgotten about this income source. In 2015, we earned about $20 of interest from our EF savings with Ally. I did not report this on my taxes. My OCD kicked in and I started to feel anxious about an audit. Few questions:

1) Is there a way to retroactively add this to my taxes after I've already filed?
Sure, file an amended return. A 1040x is easy in TurboTax, but fight your OCD and don't file it now. More tax documents you forgot about may still be coming. Some types of 1099's are not mailed until this month sometime, and commonly these things get amended so you get a revised one later.

I like to work the taxes early too, but we find it's best to sit on the completed return until at least April 1 before submitting it. Often an "I forgot" pops up in March.
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mouses
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Re: Already filed taxes, didn't include small amount of interest income

Post by mouses » Tue Feb 02, 2016 9:09 am

I keep a list of every place I expect income from...

pshonore
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Re: Already filed taxes, didn't include small amount of interest income

Post by pshonore » Tue Feb 02, 2016 9:19 am

Make sure the extra $20 causes an increase in tax owed. If you used the "tax tables", note they are $50 "wide", meaning adding $20 to your income may or may not jump into the next higher $50 range. The worse that will probably happen if you do nothing, is you will get a CP 2000 letter noting you owe $5 (25% of $20) plus a small interest charge about a year from now. And if you do amend, wait at least 30 days.

livesoft
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Re: Already filed taxes, didn't include small amount of interest income

Post by livesoft » Tue Feb 02, 2016 9:52 am

I would wait to file the amended return. Who knows how many other mistakes you will encounter? After all, it is only the beginning of February.

And it is good practice to file an amended return anyways.
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dbr
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Re: Already filed taxes, didn't include small amount of interest income

Post by dbr » Tue Feb 02, 2016 9:56 am

I'm pretty sure that when the IRS checks the reports they receive against what you list (by computer), if there is additional tax due they will just change your return for you and bill you the difference with interest. There may be no difference.

I truly doubt they decide to audit someone after missing a very small income item.

mlott1
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Re: Already filed taxes, didn't include small amount of interest income

Post by mlott1 » Tue Feb 02, 2016 10:15 am

I would just wait and see if the IRS picks up on the difference. They might not do anything, since it is such a small amount, as has already been stated, but the only thing that might happen is that you will get a letter (not even a nasty letter) of notification about the error. The current IRS is not like the old IRS. I had some extensive dealings with them a few years ago in regards to owing over $6,000 (due to my cashing out a retirement plan prematurely when I was out of work). Always very nice, and, more importantly, very reasonable. Heck, a couple of years when I owed some taxes, I would send in a payment of $25, when I owed several hundred, and all that happened is that I got the IRS letter, and then I sent them a check for the balance. A small honest mistake like this triggering an audit is about as likely as hitting a lottery.

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Kosmo
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Re: Already filed taxes, didn't include small amount of interest income

Post by Kosmo » Tue Feb 02, 2016 10:17 am

I highly doubt the IRS will put you on the naughty list. You're shorting them only a few bucks. They'll catch it and notify you, and you'll pay it.

However, I suggest you do file an amended return for the sole purpose of learning how to file an amended return. It's not all that complicated and won't take very long, especially using Turbo Tax. But wait a while until submitting it because something else may pop up. A few years back before I got married I was doing my wife's taxes and I had to file 2 amendments. One because I noticed a mistake right after I filed it, so I corrected it. And a second because of a late arriving 1099. So wait a while and make sure you have all the info before submitting.

SimonJester
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Re: Already filed taxes, didn't include small amount of interest income

Post by SimonJester » Tue Feb 02, 2016 10:17 am

Are you getting a refund? If so wait until that is processed and then file the 1040X, if you owe any additional taxes include a check for the additional amount owed now. Filing the 1040X is an easy process, if you do not you are going to have to deal with it when they send the CP2000.

I filed my return one year only to receive a corrected W2 two weeks later. I submitted a 1040X and then discovered I had made a typo on one of the numbers from the corrected W2 and had to submit a second 1040X. In the end it was all sorted out when I received two CP2000 first one correcting my typo for me and the 2nd one confirming my next 1040X and the corrections.
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ubermax
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Re: Already filed taxes, didn't include small amount of interest income

Post by ubermax » Tue Feb 02, 2016 10:26 am

If IRS catches the omission , then to my mind it's a judgment call on their part whether to recalculate your results ; my guess is that for a small amount like that they would ignore it ; during my career I found the IRS to be much more reasonable than say the PBGC or DOL .

Good Luck !!!

SouthernCPA
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Re: Already filed taxes, didn't include small amount of interest income

Post by SouthernCPA » Tue Feb 02, 2016 12:15 pm

The IRS is just going to send you a notice to pay the difference (couple bucks) if they even do that at all. They aren't going to send field auditors over $20 in interest. I wouldn't worry about it and would just wait for the notice.

YttriumNitrate
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Re: Already filed taxes, didn't include small amount of interest income

Post by YttriumNitrate » Tue Feb 02, 2016 12:42 pm

deleted.
Last edited by YttriumNitrate on Sat Mar 12, 2016 12:49 pm, edited 1 time in total.

The Wizard
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Re: Already filed taxes, didn't include small amount of interest income

Post by The Wizard » Tue Feb 02, 2016 12:47 pm

pshonore wrote:Make sure the extra $20 causes an increase in tax owed. If you used the "tax tables", note they are $50 "wide", meaning adding $20 to your income may or may not jump into the next higher $50 range. The worse that will probably happen if you do nothing, is you will get a CP 2000 letter noting you owe $5 (25% of $20) plus a small interest charge about a year from now. And if you do amend, wait at least 30 days.
This. ^^

If no additional tax would be due, I would just let it slide...
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LateStarter1975
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Re: Already filed taxes, didn't include small amount of interest income

Post by LateStarter1975 » Tue Feb 02, 2016 1:18 pm

mouses wrote:I keep a list of every place I expect income from...
+1
This is what I do every year. I keep a record in a file of every potential income source and all other tax-related documents. It makes it a lot easier for me to have all I need before I file
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MnD
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Re: Already filed taxes, didn't include small amount of interest income

Post by MnD » Tue Feb 02, 2016 1:18 pm

Small errors and omissions often do not trigger a CP2000 letter.
Before I learned to be patient and brokerages slowed down their issuance of 1099's I would get amended ones for small differences that never triggered a CP2000. If you have a larger issue or error, the CP2000 will also include any other smaller discrepancies.

Jamieson22
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Re: Already filed taxes, didn't include small amount of interest income

Post by Jamieson22 » Tue Feb 02, 2016 1:24 pm

My proven (by myself) method to avoid this issue:

1. Do taxes in TurboTax in January.
2. File said taxes in March. (April if you owe).

Gives plenty of time to catch this little issues and update.

Topic Author
neuro84
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Re: Already filed taxes, didn't include small amount of interest income

Post by neuro84 » Tue Feb 02, 2016 9:42 pm

Next year, I'll file in March!

I'll do the 1040X after waiting a few weeks to make sure no more documents come sneaking along.

I got a small federal refund and I owed a small amount of state. I'll send them both a check if the $20 changes the amount owed.

I really appreciate the advice, Bogleheads. You guys are terrific.

trueblueky
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Re: Already filed taxes, didn't include small amount of interest income

Post by trueblueky » Wed Feb 03, 2016 2:07 pm

neuro84 wrote:Next year, I'll file in March!

I'll do the 1040X after waiting a few weeks to make sure no more documents come sneaking along.

I got a small federal refund and I owed a small amount of state. I'll send them both a check if the $20 changes the amount owed.

I really appreciate the advice, Bogleheads. You guys are terrific.
Don't file 1040X until you have the refund from the original 1040 (or your check has cleared if you made a payment). That's been the standard advice from my seasons working for a tax-prep company, and more recently, as a VITA volunteer.

riverguy
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Re: Already filed taxes, didn't include small amount of interest income

Post by riverguy » Wed Feb 03, 2016 2:24 pm

What is the rush to file taxes so early anyways?

Allixi
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Re: Already filed taxes, didn't include small amount of interest income

Post by Allixi » Wed Feb 03, 2016 2:37 pm

riverguy wrote:What is the rush to file taxes so early anyways?
Probably all the news about fraud/theft where someone files under you name and steals your return.

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ursineogre
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Re: Already filed taxes, didn't include small amount of interest income

Post by ursineogre » Tue Feb 09, 2016 5:22 pm

I used H&R Block to file in January and now I found out that some shares my wife had that her parents bought for her are (finally) considered worthless. The company had been going downhill for years and now the stocks are worth nothing. H&R Block online says this:

"To file an amended return, download and file Form 1040X from www.irs.gov. You must mail this form. You can't e-file it."

I want to file the amendment, since I'll be getting a few hundred dollar refund. Should I fill out a paper 1040X and 1099B or is there another online option?

Thanks

trueblueky
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Re: Already filed taxes, didn't include small amount of interest income

Post by trueblueky » Tue Feb 09, 2016 5:36 pm

ursineogre wrote:I used H&R Block to file in January and now I found out that some shares my wife had that her parents bought for her are (finally) considered worthless. The company had been going downhill for years and now the stocks are worth nothing. H&R Block online says this:

"To file an amended return, download and file Form 1040X from http://www.irs.gov. You must mail this form. You can't e-file it."

I want to file the amendment, since I'll be getting a few hundred dollar refund. Should I fill out a paper 1040X and 1099B or is there another online option?

Thanks
Do not file 1040X until the IRS has processed the original submission. That is, you have the refund check, or your check has cleared.

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ursineogre
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Re: Already filed taxes, didn't include small amount of interest income

Post by ursineogre » Tue Feb 09, 2016 5:43 pm

Sorry: forgot to mention that I already got and deposited my federal and state refunds. So, yes, the original has cleared. I'm just wondering why I would have to file a paper copy rather than file the amendment online.

mikep
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Re: Already filed taxes, didn't include small amount of interest income

Post by mikep » Tue Feb 09, 2016 5:48 pm

For $20 of interest income I would not bother amending. If they want it they will catch up with you.
If you have another reason to amend anyway then sure fix it.
Next time don't file so early.

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