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I filed my original 2022 tax return last year in February and shortly after received a refund. A month later, I realized I forgot to include my IRA tax-deductible contribution and filed an amendment. This time the refund took a few months to be processed but I finally got a check from the IRS with the additional refund plus some interest (26$) due to the time it took them to process it.

Now I have to file a 2nd amendment (IRA deduction didn't apply in my financial situation). I have prepared the new amended return and, as expected, I'd give back to the IRS the refund from the 1st amended return but I'm not sure how to include the additional interest. Can this interest be included in the tax return (if so, which form/cell?) or should I just wait for the IRS to process the new amended return and send me a letter asking for the interest back?

Thanks in advance for any help.

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  • Assuming this is a trad IRA, if you (in the end) are making a nondeductible contribution, don't forget to file 8606 to record the basis and reduce your future taxes when you (retire and/or get old and) start taking distributions. While 8606 is usually attached to a return, you can file it separately if necessary. Jan 24 at 6:16

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Just submit the corrected return with as much additional money as should have been included earlier. The IRS will bill you for any interest or penalty.

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  • That was my plan but wanted to see if I could do it pre-emptively to avoid any penalty. Doubt that would be substantial on such a low amount anyways. Thanks for your answer!
    – Michele
    Jan 22 at 20:58
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    @Michele: Note the interest is computed in both cases -- tax decreased and refund paid or tax increased and balance due -- from the original due date, Apr. 15 2023. The interest from Apr '23 to Feb '24 will be more than the interest was on the same amount from Apr '23 to say Aug '23. Normally the failure-to-pay penalty doesn't apply when amending to increase given you pay with the amendment or on demand; for the specific case of amending to restore an item on the original return, it might be argued 6651(a)(2) applies instead of (3) but I doubt they'll even try. Jan 24 at 6:14

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