do I need to refile a corrected 1040 taxform?

[markusk]

Need some advice.

Did my federal and state (CA) using turbotax last week. Getting a $3700 federal and $1800 state refund -- however, the CA refund maybe an IOU instead of cash due to the current budget problems in CA

Anyway, I opened up a small checking account with BofA last year, getting almost no interest. In the year end statement from December 2008, the YTD interest earned for 2008 was 83 cents, which is what I wrote in the tax forms.

Today I get the offical 1099-INT from BofA and it says "Gift/Reward Interest Income $25"!! I think this maybe a recent promotional thing because I did not know about it.

Should I file a correction? If I don't, will I get audited? Any input appreciated.

[sweeps]

Yes you should file an amended return. Will you get audited if you don't? Probably not. But why risk it.

[Goldy1]

My dh realized he forgot to file a form to get a credit for us paying property taxes so the government owes us money going back years. WE are sending it the corrected forms so we can get money due to us we neglected to get. Hope that doesn't trigger an audit, but everything is truthful and legit so it doesn't matter really, but I still don't want that. lol

[moneybags]

You won't get audited for it, but the IRS matches forms up and will send you a letter that you owe taxes on the nonreported amount (with tax & interest). It is better to correct it now.

[BadSaver]

Better to do a 1040X & 540X. I got nailed, penalty + interest, for something like that last year. Mine was in the $200 range though...a simple typo on my part.

I think the IOUs will be cashable at some banks. California will pay interest of 5% on the IOUs as I understand it.

[SacredFaerie]

California will be holding returns for 30 days starting Feb 1. (just fyi)

Also you can't file 1040X yet. The IRS hasn't released the form yet.

[markusk]

Thank you for your replies.

I E-filed this year and it said that I should get a refund in 8-10 days directly deposited into a savings account. From what I understand, the 1040X and 540X need to be mailed (no E-file option) and it takes about 4-8 weeks to get it processed.

So what happens in the meantime? Even if I mail in the 1040X today there will be a delay in processing, so will I still get a fine + interest? It's only a $25 "error" thanks to BofA's "gift/reward" so it's not a big deal in the greater scheme of things but I guess I want to know....

Anyway, thanks again for your replies!

[noppenbd]

You'll get your refunds and then based on the 1040X and 540X calculations you'll owe a few dollars based on what your refund should have been. But we're talking about interest/fines on $25 extra income? I'm guessing you might end up owing $5-7 tops, including tax and interest. Don't sweat it, just fix the mistake and get it over with.

[MonkeyMama]

You don't owe until April 15th. IRS won't send out deficiency notices out until 12+ months anyway. So you have plenty of time to amend.

Just as a FYI - if you don't get a notice right away - you are not off the hook. The IRS is SLOW (I have seen them take 2 or 3 years for a mismatch in interest income) and they charge a lot of penalties and interest. Could be why they are slow.

[Joan.of.the.Arch]

Oh, foo! You just made me remember --after e-filing last night-- that my credit union gave me $100 and that did not appear on the 1099-INT they sent. Guess I'll have to look into that.