IRS sent me a huge (incorrect) check, 10months after I submitted amended return

[John33]

Almost a year after submitting an amended return (AR), IRS sent me a huge (incorrect amount) check.

Well,  relatively huge,  since it's around 4x the correct amount (which should've been around $200).
Must be the interest they owe.  haha   Nah....   

I vaguely remember a few people on this forum receiving mysterious IRS checks...but
a topic like this is hard to search for on a forum.

The story is: Many months ago I submitted an AR for taxyear 2019 (using HRblock software),  in which I made
a correction of  the amount of qualified dividends for one of my mutual funds  This resulted in my
request for around $200 refunded.   

And in the explanation box, I wrote (probably too briefly??):   "Adjusted the amount of qualified dividends".

So I just got a check from IRS for around $800.   And the IRS letter says "we made the changes you requested ...
to adjust your schedule D".

So the check amount isn't right,  and "schedule D" isn't right.....shouldn't they say "schedule B"?

Well actually,  my schedule B looks the same for both the original and AR....The only thing that
looks different in the hard copies of the two returns    is "box 3a" (qualified divs),
  on page 1 of the 1040  (which is a larger number on the AR)....and of course,  the
"amount of tax owed" box ( lower on the AR, by about $200) . 

And here is where it gets complicated:

I want to do a SECOND AR (and it's all ready to be mailed in),  because I made another small mistake
on the original return), since I
had neglected to do form 1116 (which would give me about $300).

So this leads to some  questions.

If it wasn't for the second AR that I'm ready to send,  I normally would just cash the check
and "wait and see" for the IRS to find their error (assuming they made errors and not me,  which i'm
quite sure about)....and I would obviously hope I never hear from them.

But now that I want to send in the second AR (which would give me about $300)
....I have no idea what that will lead to...but most likely
it will announce to them "You guys made an error with that big check...I'm waiting for you to take most of it back".
??????

The only thing I know is that I have at least one more year before this second AR is due, 
so there's no rush (going by the "3 year...." deadline)....but I have no idea what the best
thing to do is    (but calling them and waiting on hold for hours to talk to someone who may
have no idea what is going on.....is not attractive...)..

So I guess I could just wait for another year to see if they get back in touch with me,
to take some of their money back.....and then I could send the second AR.......
BUT   if they still haven't contacted me by next year....I don't know if I"ll
want to send in the second AR then (which might lead to the above situation: "You guys made an error...))....

Thanks for advice, and theories on what might be going on...

p.s. I haven't even cashed the check yet...I guess I should do it this week...

[secondcor521]

Your explanation was fine.

I doubt the IRS made a mistake.  And if they did, they're not going to find it of their own initiative, because they consider your amended return to be a completed item.  And if they did, I doubt you sending in a second amended return is going to trigger them realizing it.

I'd cash the check and send in the second amended return now.  The IRS is certainly able to keep much more complicated things straight, so I don't think you're doing anyone any favors by waiting on either of these items.

Their notices and letters are generic, so they pick the one that is closest to applicable.  In your case, since you have qualified dividends and are using tax software, your tax calculation is probably done on the qualified dividends and capital gains worksheet, of which there is some version in the Schedule D instructions.  So that may be the connection.

As for why they apparently gave you too much, you should be getting a mailed notice, which will have verbiage about what to do if you disagree with what they did.  You can respond to that if you want, or just accept the $800 - again, the chances that you're right and they are wrong is very very low.

One other thing you could do is go get an IRS account, log in, and request transcripts for tax year 2019.  Going through those line by line with your second amended return may eventually help you debug and identify the reason for the difference.  Then you'll have some understanding to go on.

The only thing I can think of generally is that your change in qualified dividends had some sort of cascading effect that your software didn't account for but the IRS computers did.  I can't imagine what that might be regarding qualified dividends, but an example of the sort of thing I'm thinking about is a reduction in AGI could move you under a breakpoint for the retirement savers credit - moving you from 10% to 20% or 20% to 50%.  But your tax software should have probably included that, unless you somehow made a mistake during the amending process.  Although, given that you're still amending your 2019 return and are on your second amendment, that seems like a reasonable possibility to me.

[John33]

wow...very interesting...I appreciate it mucho......
I'm gonna write back again later (maybe tonight...possibly next days).... after I re-examine my returns...and do some
thinking on this.....I do have an IRS account so I'll also look at the transcript as you mentioned...
By the way,  this may not matter,  but it was a fairly simple tax return...with income only  from dividends, capital gains  (some
distributions,  some from selling mutual funds)...and also that form where one requests a stimulus payment-credit if it (one of them) was never received by the tax payer (me).

[secondcor521]

wow...very interesting...I appreciate it mucho......
I'm gonna write back again later (maybe tonight...possibly next days).... after I re-examine my returns...and do some
thinking on this.....I do have an IRS account so I'll also look at the transcript as you mentioned...
By the way,  this may not matter,  but it was a fairly simple tax return...with income only  from dividends, capital gains  (some
distributions,  some from selling mutual funds)...and also that form where one requests a stimulus payment-credit if it (one of them) was never received by the tax payer (me).

The first two of the most recent stimulus payments were associated with tax year 2020 returns, although the advance payments of them were sometimes based on one's 2019 return.  Since your original post mentioned a 2019 return, your above statements are a bit puzzling.

Since your tax return was fairly simple, it should be fairly simple to sort out the reason for the difference from the transcripts.  I think that's your best bet for figuring out what happened.

[John33]

Right......sorry about that....I wrote that without thinking or looking at my returns for a few months  (other than the first 5 or so pages...and sched.B and D etc.)........It must've been taxyear2020 that I claimed $500 ,  for the "second stim.payment" that i never
got in the mail  (I did get the 1st and 3rd).
Anyway, sometime soon I'll  login to IRS and see what transcripts are there.....If both the original taxyear2019 transcript and the first AR transcript  are there, that would be useful for a side by side comparison....Otherwise,  I"m not sure.
Thanks much for all the info....

[John33]

I just had an interesting hour downloading all  PDF files related TY2019, from my IRS account.  I studied all
four,  but two are relevant: and both are transcripts of my original TY2019 return (but one is called "Account Transcript"
and one is called "Tax Return Transcript").   But they're identical except
for one having some lines (under a heading of "transactions")  which simply show the dates the AR was processed,
the amount of "reduction in tax", and date and amount of check sent out.   So there's nothing like a transcript of an amended return...
But one of the 4 pdf files does show my corrected qualified div. number  (a large file called "wage and income"), but i didn't
learn anything by looking through it.   

I noticed that someone named Vera Robinson signed the check.  I'm drafting a letter....how does it sound?

Vera Robinson
IRS
Ogden, Ut

Hi Vera...How ya doin.  I just got a check from you..thanks.  Can you explain how you got that amount?
Thanks. 
John.

[Sibley]

I'm guessing that you're probably a person who really needs the i's to dot and the t's to cross, so not understanding this is probably really bugging you.

Drop it. You got money. You don't understand why. Given that you apparently made sufficient errors to have to file an amended return twice, you're not a tax genius. It's ok, very few people are (and even those people probably aren't).

[John33]

Secondcor...if you're still around..... an amazing followup....

As I had mentioned below last year, I submitted an amended return (AR) for taxyear 2019,  and
subsequently got a mysteriously large refund check which never made sense.  After doing alot of checking,
I was (and am) sure I made no error...and I suspected IRS made an error.  I cashed the check, though. 

In January2022, I submitted a second AR  ("AR-2") for that same taxyear (2019), because I had forgotten
to do the foreign tax credit (form 1116)...and I was requesting a refund of roughly $280. 

IRS finally completes the processing around september2022...and  I get a letter saying so....but
no info. on a refund other than something like "if you are due a refund you will receive it in a few weeks,
and if you owe money....etc.etc.).. 

So every few weeks since Sept. I'd look at my online account....no hint of a refund or any
monetary adjustments to my account. 

I finally call yesterday and speak to someone who knew nothing other than  (after 20 minutes of coming
and going away from the phone to look at my account or whatever) that  "it looks like you have a
 balance" (i.e., i owe the IRS money).  She tries to transfer to some other dept. who may know something, 
but that doesn't work (wrong dept.).....so that was the end of the phone calls. 

Later on, I login and  look at my IRS account transcript (2019)  and all of a sudden there are new entries (that were
not there a few days ago):  tax
is now owed (roughly $200) and some "late. payment...penalties" (roughly $25).....but another bizarre
thing is these new lines are all dated in the future.....like...ONE WEEK FROM NOW. 

So I spend a few hours looking through all my old records,  and I came up with an amazing coincidence:

Let A= the mysterious overpayment from the IRS (for AR-1) discussed above and last year.
Let B= the refund amount I was requesting with AR-1.
Let C= the refund amount I was requesting with AR-2.
Let D=  the new tax IRS says I owe for 2019 (roughly $200 as mentioned above). 

I then  notice that D = A-B-C.

So it looks like the IRS wants their money back,  and they are charging penalties  for their error....
(or are there other conclusions?). 

I haven't received any letters (since this all happened yesterday....but if/when I receive a letter....
I assume I should write back requesting no penalties...(?).   I may try to call again and see what
happens. 

[secondcor521]

I'm still around, although I re-read the thread.

I think you'll get a letter from the IRS explaining the new entries on your transcript.  It'll probably be several weeks from now, and maybe even a few months.

I don't know why they're future-dated.  There's probably an arcane reason that isn't really relevant.  I wouldn't worry about that part personally.

At this point your situation is so complex that it's unlikely to be resolved in a forum like this one.  Your best bet is to read the letters from the IRS and study your transcripts carefully in chronological order, line by line.  If you still don't understand what is going on (and want/need to), I'd take it all to a local CPA who prepares taxes.  Note that the CPA will very likely charge fees to research your questions and help you out.  I think it's reasonable to charge for something like this, but those charges may be more than you're interested in paying.

The IRS is not charging you late payment penalties for their mistake.  As I wrote originally, it's very likely that the IRS did not make any mistake.  It's more likely in most cases that the taxpayer made the error, and the fact that you've done two amended returns on your 2019 tax return makes it even more likely, as another poster mentioned, that it's your error.  The late payment penalties are because you owed them money for that tax year and didn't pay within the required time frame.  At this point, though, again it's really hard to figure out in a forum like this exactly what money you owed them and when.

You can always write and request an abatement of the penalties, and that information should be in the forthcoming letter.  Follow the instructions in the letter.  I'm not sure I would for $25, but that's really a judgment call for you to make if it's worth your time and hassle.

[John33]

[MOD NOTE: Yeah, all they did was call you "not a tax genius" as far as I can tell. No need to accuse anyone of trolling]

Incredibly bad response,  especially withh citing some troll to help support your conclusion  that I made an errors...due to (oh my god!!!!.....somehow neglecting to do form 1116)......yes just so you know..I  actually didn't "forget" to do form 1116 ...but i realized later on that I should
claim FTC......so I went back and claimed it with AR-2.   So pretending that doing "2  amended returns" suggests something about my abilities....(whatever you want to call  it)   doesn't shed a good light on  you    (and your troll friend).    .

My write-up shows it's actually very simple...it's all explained in detail....including what the transcripts show and when they show it.   
I  have them right in front of me.   (not that you're interested,  but it clearly shows the incorrect over-refund (date and amount),    and a year later
the completion of AR-2....and then nothing until yesterday (inserted at the time I called).....now  showing tax due IN  THE EXACT
AMOUNT THAT ....??JUST A COINCIDENCE??  equals the IRS over-refund amount minus...minus...minus.... (see equation). 
All very simple.  ..but NOT a coincidence.

 
The IRS made the error....I made zero errors. 

Next time don't respond at all--much better for you than to write garbage claiming it's "so complex".   

p.s. Go read some other tech tax forums and see what some other people are like who did 2 AR's.....You'd be
surprised at the high percentage who are actualy just as capable as yourself!!   (hard to imagine..right?). 

p.s.  It's not too hard to come up with a plausible theory on the post-dating  of  the penalty amounts,  given
that they appeared later in the day that I called...and while the rep was looking thru my account and  trying to transfer me to other departments to figure out the problem.