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A friend of mine, with self-employment income did his/her income tax using Turbo Tax. Turbo Tax produced the tax return including Schedule 1. My friend has a Qualified business income deduction. However, the IRS did not allow for that deduction because Schedule 1 was not filed. As a result the IRS is asking for additional money. I believe that either my friend failed to include Schedule 1 or the IRS lost the form. The return was filed by mail. That is, it was a paper return.

Can my friend simply file the Schedule 1 now? I am thinking my friend should file form 1040X and schedule 1. Is that right?

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  • I'd go with a complete revised submission rather than just trying to file one form. That removes any possible confusion about what you're trying to do and why.
    – keshlam
    Nov 26, 2023 at 21:52

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You didn't provide enough information to answer your question. the IRS did not allow for that deduction because Schedule 1 was not filed - what is this based on? Did they receive an official letter? If so - what type of letter and what exactly does it say? It matters, because different IRS communications require different responses.

It may be that the return is currently under the examination ("audit"), and they need to talk to the examining officer and explain the situation to them. In that case, just faxing the missing piece of paper may be enough.

It may be that the return was accepted, but the specific deduction was rejected, and then you'd need to understand why. Missing schedule usually would lead to a CP2000 letter, to which they would again respond with the copy of the missing schedule.

It is impossible to answer your question with the information provided.

The general guidance from the IRS for this situation is not to file an amended return:

Also, don’t file an amended return because you forgot to attach tax forms such as Forms W-2 or schedules. If necessary, the IRS normally sends a request asking for those documents.

General advice:

  • E-File unless impossible. Yeah, it costs $30 more or whatever and that's how Intuit makes their money. Talk to your congressman to fix the system, but don't try to make your own life harder to make a point - no-one cares. Paper returns get much longer to be processed, have mistakes because they need to be manually transcribed into the system, and may get lost in full or in part.

  • Work with a tax professional. Again, will cost more, talk to your congressman to fix the system. But tax professionals will help you navigate the complexities, find additional loopholes you may not be aware of, or help you avoid doing things that don't help you (like paper-filing returns).

  • Read the IRS notices carefully, every word means something. Call the phone number on the notice for clarification. Be mindful of deadlines - they're statutory and if you miss them you may end up in a much worse situation.

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  • "Call the phone number on the notice" it's less common but not unheard of for fake IRS notices with fake phone numbers to come on paper
    – stannius
    Nov 28, 2023 at 20:01

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