I received a 1099-DIV form in April, after i filed my 1040A and received my refund. The amount was incorrect, so to avoid interest penalties, i sent in a payment for the taxes owed using the current 1099-DIV form by April 15th. An IRS rep told me that the payment would be applied to my account until they received the 1040X. I have not filed a 1040X yet b/c i have not received a corrected form, and i thought i had at least a year to do anyway. The IRS just sent me a check for my payment plus interest. 1) I'm confused - does this mean i don't owe additional taxes - i thought they would have seen the 1099-DIV form, which was not included in my 1040A? 2) If not, how do i avoid further penalties since they sent my payment back? Thank you.

“ An IRS rep told me that the payment would be applied to my account until they received the 1040X. “---->Not all of the IRS agents are reliable as a matter of fact.
“I have not filed a 1040X yet b/c i have not received a corrected form, and i thought i had at least a year to do anyway. The IRS just sent me a check for my payment plus interest.
“ 1) I'm confused - does this mean i don't owe additional taxes “---->I guess it depends.
“i thought they would have seen the 1099-DIV form, which was not included in my 1040A? “----->Not that I know of until you receive it from your broker(they file Form 1099-DIV with the IRS; also send a copy to you.); copy of 1099div/1096 are sent to the IRS. Since you received the 1099 form after filing your taxes, an amended return should be filed; a separate amended return is required for each year that is being changed. A claim for refund usually must be filed within 3 years of filing the original tax return.Data on the 1099 form affect your income and the IRS makes clear that incorrect reporting of income is one of the specific reasons you should file your amended return. Furthermore, transactions reported on 1099 form can affect tax return form sections on deductions, tax liability, payments and refunds. You need to file Form 1040X to amend federal tax returns 1040-A. A copy of the omitted 1099 form should be attached and filed with the amended return ONLY IF federal taxes were withheld. Timely filing of an amended return is recommended, as the IRS may charge interest and penalties in situations where you were negligent. You cannot file an amended return electronically.
“2) If not, how do i avoid further penalties since they sent my payment back? “----->It depends; if the IRS finds the errors on your original tax return before the amended return is filed, certain penalties and interest could apply. Then, to avoid penalties,you need to file an amended tax return for the tax year owed and pay any additional tax owed by April 15 of the following year or sooner. Penalties for failure to pay taxes after the due date is 0.5 percent of your unpaid taxes for each month or part of the month until it is paid in full.However, if you are filing an amended tax return for an additional refund, I mean , as long as you’d be subject to tax refund, then, you can file a claim within three years after the date you filed your initial tax return or within two years after the date you paid the tax, whichever comes later. There isn't a penalty if you file after the dates specified, but a credit or refund may not be issued. I guess you need to contact the IRS agent to get the accurate solution on your taxation situation.

Worst case is: if the IRS inquires you can
reply with the amended return. The IRS has a computer program that audits or checks each return against 1099-DIVdocuments it has on file. .

Thank you Wnhough for trying to address my questions. I was trying to get more info since i noticed i never get the same answer from the IRS agents.

I thought the IRS automatically checks all the forms reported to them, so when they got the 1099-DIV form (i'm assuming they got it since the copy was mailed to me) they would have gone back and checked my 1040A filing & not issued another refund check.

“I thought the IRS automatically checks all the forms reported to them, so when they got the 1099-DIV form (i'm assuming they got it since the copy was mailed to me) they would have gone back and checked my 1040A filing & not issued another refund check.”---> I guess so; the IRS Service Center will manually process your amended return. They will check to make sure your explanations are sufficient. They will check to see that you have sufficiently documented the changes in your tax return. For example, they will double check your 1099 , withholding, and other information reporting on your amended tax return. If the IRS needs more explanation or documentation, they will write you a letter and ask for the specific information they need. If you owe additional tax, you should mail in a check to pay the tax in full. There's no conclusive evidence whether an amended tax return will trigger an IRS audit. However,the IRS does check amended tax returns more thoroughly than original tax returns. If you explain the reasons why you are correcting your tax return, and if you back this up with proper documentation, the IRS is likely to process your amended return more efficiently.

I talked to the IRS help line, and the agent said that since i did not owe taxes on my original return, that i would not be charged for interest and penalties for filing a 1040X Amended Return to include the late 1099-DIV and paying the taxes owed at the time of filing (about $7,000). I could cash the "refund" check and just write a new check for the correct amount. I think this sounds correct b/c i saw something in the 1040X instructions that states, "If you pay the entire balance due on your amended return within 1 year of filing your amended return, no interest or penalties will be charged on the balance due." (Then i don't know why i was told to send in a payment by April 15th.)

Another agent told me to write VOID on the "refund" check and send it as payment when filing my 1040X and the IRS will figure out the difference (since i paid more than what i will owe in the end with a corrected 1099-DIV).

Which one protects me best and aggravates the IRS less?

Oops, nevermind the part about "If you pay the entire balance due on your amended return within 1 year of filing your amended return, no interest or penalties will be charged on the balance due." I think this only pertains to filings regarding hurricane-related casualty loss.

“ since i did not owe taxes on my original return, that i would not be charged for interest and penalties for filing a 1040X Amended Return to include the late 1099-DIV and paying the taxes owed at the time of filing (about $7,000).”---->Correct. In general, as long as the IRS finds the errors on your original tax return before your 1040X is filed, then, certain penalties and interest could apply. There really isn’t a “deadline” when it comes to a 1040X. If you do not pay the additional tax, about $7K, due on Form 1040X within 21 calendar days from the date of notice and demand for payment, the penalty is usually 1/2 of 1% of the unpaid amount for each month or part of a month the tax is not paid(In general, to avoid penalties, a taxpayer needs to file an amended tax return for the tax year owed and pay any additional tax owed by April 15 of the following year or sooner).So, to avoid interest/penalty, you need to pay any additional taxes resulting from your amended tax return by the specified due date. On the contrary, if you get examined by the IRS and it is determined that you are owed a refund, interest will also be paid. Interest paid by the IRS is considered income and must be reported on Schedule B. If you file a return and later discover that you made an error that results in an additional refund, interest will be paid on the overpayment. Interest is paid from the date filed (or due date without extensions) until approximately within 30 days of issuing the refund.For example, if you filed your 2011 tax return and later remembered that you did not claim your real estate taxes on Sch A as a deduction, the IRS will refund you the tax plus interest when you later file an amended return.
“I could cash the "refund" check and just write a new check for the correct amount.”--->I guess it depends; in general, if you make a change that gives you a bigger tax refund, it’s better to wait until the first return is processed before filing the change as in your case. When you receive your refund check, you can cash it and send off the amendment. The IRS will then send you another refund check for the difference if you are subject to tax refund. You need to remember to amend your state income tax return too UNLESS you live in a state that doesn’t impose income taxes to its residents. Some state requires that if the IRS changes your federal return, you must amend your State return within 6 months from the date the federal report is received. If you do not amend your State return to reflect the federal changes and the Department of Revenue receives the report from the IRS, an assessment may be made by the Department within three years from the date you received the report, and you forfeit your right to any refund which might have been due by reason of the changes.
“I think this sounds correct b/c i saw something in the 1040X instructions that states, "If you pay the entire balance due on your amended return within 1 year of filing your amended return, no interest or penalties will be charged on the balance due." (Then i don't know why i was told to send in a payment by April 15th.) “---->As described above, if you do not pay the additional tax due on Form 1040X within 21 calendar days from the date of notice and demand for payment, then you’d be subject to tax penalty/interest.
“Another agent told me to write VOID on the "refund" check and send it as payment when filing my 1040X and the IRS will figure out the difference (since i paid more than what i will owe in the end with a corrected 1099-DIV) .Which one protects me best and aggravates the IRS less.”---->If I were in your shoes, then I’d follow the agent’s instruction.” to write VOID on the "refund" check and send it as payment when filing my 1040X and the IRS will figure out the difference.” You may submit a statement that says you follow the instruction of the IRS agent with your 1040X.
“nevermind the part about "If you pay the entire balance due on your amended return within 1 year of filing your amended return, no interest or penalties will be charged on the balance due." I think this only pertains to filings regarding hurricane-related casualty loss.”---->To waiver penalties/interest, as long as you pay the entire balance due on your amended return within 1 year of timely filing your amended return, no interest or penalties will be charged on the balance due. Payments made after you file Form 1040X should clearly designate that the payment is to be applied to reduce the balance due shown on the Form 1040X .Taxpayer that claimed a casualty loss on his/her main home resulting from Hurricanes Katrina, Rita, or Wilma, and later received a qualified grant as reimbursement for that loss, he/she can file an amended return for the year the casualty loss deduction was claimed (and for any tax year to which the deduction was carried) to reduce the casualty loss deduction on Sch A (but not below zero) by the amount of the reimbursement.