US Income Tax Thread: Bank error in your favor! GO DIRECTLY TO JAIL.

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > US Income Tax Thread: Bank error in your favor! GO DIRECTLY TO JAIL.

Zantie: Mar 30, 2003; Death. The capricious dance of Now You Stop Moving Forever.

I have a question about if my husband and I need to amend our 2010 return due to a late 1099-MISC form he just got.

My husband works freelance and keeps a good record on income so this amount was already included under Gross receipts with all the other checks he got. So to include the late 1099-MISC he'd have to subtract that amount from the other non-1099'ed income he got, but ultimately that still results in the same amount of self-employment income.

In other words:

Filed with no 1099-MISC's and he had SE income total of $6596.

With the 1099-MISC the SE income total is still $6596 ($2414 on the 1099 + $4182 from everything else).

Because this doesn't change any of the tax due nor our refund amount do we even need to amend this? My worry is that the IRS would get the 1099 from the company and then assume my husband reported $6596 without the $2414, and then send us a bill assuming he made $9010. Would they do that, or would they figure we included it already because it was mailed to us 8 weeks late?

# ¿ Mar 16, 2011 06:18

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# ¿ Apr 29, 2024 08:30

Zantie: Mar 30, 2003; Death. The capricious dance of Now You Stop Moving Forever.

KennyG posted:

To answer your question more directly, you'd get audited. Likely a paper audit, but possibly a full one. Assuming everything else is above board too, you're ok. I believe the ultimate arbitor of penalties is the tax paid. http://books.google.com/books?id=YZ...mistake&f=false says there is no precedent in the US Tax Code for a penalty of a harmless error in a previous year which created an error in a subsequent year.

Also penalties that aren't due to fraud or frivilous positions are calculated based on the net tax difference. (what you owed vs. what you paid, obviously they don't assess a penalty if they audit you and find overpayment)

Well, this confuses me even more when comparing your answer to AbbiTheDog's. If we would be audited they'd find that my husband already reported that income. We sent in our 2010 tax return before receiving the 1099-MISC. He didn't forget to include that income, it's there in the gross receipts since he kept record of all the checks he got last year.

Why are you bringing up harmless error for other years? The tax paid stays the same, which is why I'm wondering if we need to clarify it or do what AbbiTheDog suggested and leave it be.

# ¿ Mar 17, 2011 18:44

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > US Income Tax Thread: Bank error in your favor! GO DIRECTLY TO JAIL.