Late K1

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jdilla1107
Posts: 647
Joined: Sun Jun 24, 2012 8:31 pm

Late K1

Post by jdilla1107 » Sun Apr 14, 2019 7:46 pm

I received a small K1 today (Apr 14th) that I wasn't expecting for 2018. I already filed my taxes. I am looking at the 1040 amendment process and it looks painful. I estimate that I only owe about $200 more. I read that the negligence penalty is 20% of the amount owed and a $40 penalty seems great for not having to deal with this.

Am I missing anything? Is it reasonable to just wait for a letter from the IRS and pay the amount they specify?

jebmke
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Joined: Thu Apr 05, 2007 2:44 pm

Re: Late K1

Post by jebmke » Sun Apr 14, 2019 7:53 pm

Amendments are often easier than doing a regular return. I do 8-10 per year. Follow the instructions for 1040X and you can't go wrong.
When you discover that you are riding a dead horse, the best strategy is to dismount.

adamthesmythe
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Joined: Mon Sep 22, 2014 4:47 pm

Re: Late K1

Post by adamthesmythe » Sun Apr 14, 2019 7:57 pm

K1s are always late, right?

I sold because the K1 was too much trouble. Too late for next year, but if you sell now you won't have to deal with this for the year after.

MarkNYC
Posts: 1483
Joined: Mon May 05, 2008 7:58 pm

Re: Late K1

Post by MarkNYC » Sun Apr 14, 2019 8:24 pm

jdilla1107 wrote:
Sun Apr 14, 2019 7:46 pm
I received a small K1 today (Apr 14th) that I wasn't expecting for 2018. I already filed my taxes. I am looking at the 1040 amendment process and it looks painful. I estimate that I only owe about $200 more. I read that the negligence penalty is 20% of the amount owed and a $40 penalty seems great for not having to deal with this.

Am I missing anything? Is it reasonable to just wait for a letter from the IRS and pay the amount they specify?
The 20% negligence penalty applies only when the additional tax on the unreported income exceeds the greater of (1) $5,000 or (2) 10% of the actual tax that should have been shown on the original tax return. So the penalty will not apply to you. There is no legal requirement to file an amended return. You can wait for the IRS to issue an assessment, in which case you will likely owe just the additional $200 tax, plus interest.

Some people are uncomfortable knowing they owe additional tax, and prefer to file an amended return and be done with it.
Last edited by MarkNYC on Sun Apr 14, 2019 9:08 pm, edited 1 time in total.

Greenman72
Posts: 286
Joined: Fri Nov 01, 2013 2:17 pm

Re: Late K1

Post by Greenman72 » Sun Apr 14, 2019 8:30 pm

MarkNYC wrote:
Sun Apr 14, 2019 8:24 pm

You can wait for the IRS to issue an assessment, in which case you will likely owe just the additional $200 tax, plus interest.
+1
Wait on the IRS's matching letter. Then pay the bill.

Amended returns are a headache. And if you go to a CPA, they will charge more than that just to file the amendment. Then you'll still have to pay the bill.

TropikThunder
Posts: 1308
Joined: Sun Apr 03, 2016 5:41 pm

Re: Late K1

Post by TropikThunder » Sun Apr 14, 2019 9:53 pm

Greenman72 wrote:
Sun Apr 14, 2019 8:30 pm
MarkNYC wrote:
Sun Apr 14, 2019 8:24 pm

You can wait for the IRS to issue an assessment, in which case you will likely owe just the additional $200 tax, plus interest.
+1
Wait on the IRS's matching letter. Then pay the bill.

Amended returns are a headache. And if you go to a CPA, they will charge more than that just to file the amendment. Then you'll still have to pay the bill.
Technically, since it’s not the 15th yet, can’t OP just file a superseding return rather than an amended one? I seem to remember reading that in another thread but can’t find it (maybe since I can’t spell superseding). Then again, waiting for the bill doesn’t seem like a terrible choice in this case either.

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desertbandit442
Posts: 158
Joined: Mon Feb 20, 2012 8:41 am

Re: Late K1

Post by desertbandit442 » Mon Apr 15, 2019 6:16 am

TropikThunder wrote:
Sun Apr 14, 2019 9:53 pm
Greenman72 wrote:
Sun Apr 14, 2019 8:30 pm
MarkNYC wrote:
Sun Apr 14, 2019 8:24 pm

You can wait for the IRS to issue an assessment, in which case you will likely owe just the additional $200 tax, plus interest.
+1
Wait on the IRS's matching letter. Then pay the bill.

Amended returns are a headache. And if you go to a CPA, they will charge more than that just to file the amendment. Then you'll still have to pay the bill.
Technically, since it’s not the 15th yet, can’t OP just file a superseding return rather than an amended one? I seem to remember reading that in another thread but can’t find it (maybe since I can’t spell superseding). Then again, waiting for the bill doesn’t seem like a terrible choice in this case either.
For a personal income tax return there is really no such thing as a superseding return. I went to the link in the post you are referring to and here is what it says for personal tax returns:

“A superseding personal return should be prepared as an amended return on Form 1040X. (There is no superseding box to check.) All amended personal returns filed before the due date, including extensions, are automatically treated as superseding, incorporating the new data and modifying the original return.”

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CyclingDuo
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Re: Late K1

Post by CyclingDuo » Tue Apr 16, 2019 9:43 am

jdilla1107 wrote:
Sun Apr 14, 2019 7:46 pm
I received a small K1 today (Apr 14th) that I wasn't expecting for 2018. I already filed my taxes. I am looking at the 1040 amendment process and it looks painful. I estimate that I only owe about $200 more. I read that the negligence penalty is 20% of the amount owed and a $40 penalty seems great for not having to deal with this.

Am I missing anything? Is it reasonable to just wait for a letter from the IRS and pay the amount they specify?
It's always good to be in contact with any of your K-1 investments so you know when the documents will arrive. That doesn't guarantee everything will arrive in the most timely manner. So it's no problem to just accept with such investments you may have to file an extension some years, or an amended return some years.

We had two rather late K-1's this years (heads up was given to us from the accountants of both LLC's, so we knew when they would be arriving) as well as a 1098-T that got sent to an out of date address. As a result, and due to running out of time this year thanks to a very busy weekend work schedule - we ended up filing an extension after running the numbers through TurboTax to get as close as possible and paid the amount due.

Last year, we had to file an amended return(1040X) for a similar reason. It's not that difficult to do (we use TurboTax - so it is very easy to do to fill out the information and print out the amended return to send in), but if you are getting a refund on the original return, it's best to wait a bit until you get the refund to send in an amended paper return if you just filed your regular return. If not getting a refund, you can file the amended right on the heels of the original.

In your case, you are not obligated to file an amended return as it is not mandatory. The IRS will catch it and send you a bill.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

Hockey10
Posts: 425
Joined: Wed Aug 24, 2016 12:20 pm
Location: Philadelphia suburbs

Re: Late K1

Post by Hockey10 » Tue Apr 16, 2019 10:49 am

I used to have an investment that generated a K-1. It was always the last item that arrived each year during tax season, usually at least a month after the other 1099s and W-2s. I sold the investment to simplify my taxes. Going forward, I will never invest in anything that generates a K-!.

Determined
Posts: 323
Joined: Sat Aug 12, 2017 7:43 pm

Re: Late K1

Post by Determined » Tue Apr 16, 2019 1:36 pm

My K1 arrived today! I received notice that it was delayed until April 8. Postmarked April 12th. Dropped it the accountant, but it’s already filed. I am sending the bill to Wells Fargo😀

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