AMENDING A RETURN

[ret]

If you filed a return and was getting a refund so you applied the refund to next years taxes. Then you realized some income didn't get reported so you amend the return. On the original return the refund was 800 but after the amended the refund is only 400. Do you have to pay the 400 on the amended or can it reduce the amount applied to next years taxes?

[hillsboro15269 · Accepted solution]

It depends on when the original return was done, and when the amendment was done, and to which year you're applying the refund.

If you're talking about 2019 tax year, so that you're applying the refund to the 2020 year to be used in 2021, then yes, the amendment should cause the IRS to reduce the amount that is applied to 2020. Just remember that the operative word here is "SHOULD." As you may have heard, the IRS is woefully understaffed, and a lot of stuff ends up falling between the cracks. If we get to February 2021 and they haven't processed the amendment yet, they may get confused. You do the 2020 taxes assuming a $400 credit, and then the IRS says, "What are they talking about, they have $800 credit." They may send your client a letter with $400 saying "we fixed your return for you." Warn your client that this may happen, and they'll have to send that $400 back. But assume that they'll figure it out before next February.

If you're talking about an amendment to the 2018 taxes, where you applied an $800 refund to 2019 (which you're doing now), and discover it's only a $400 refund, you may want to call the IRS on behalf of the client, if you've got a valid POA or TIA. Technically, you should be able to do the same thing -- simply reduce the amount applied to this year, 2019. But with the short turn-around, you might just want to pay the difference and avoid confusing those poor over-worked agents. 

Good question!