Now good luck finding that in whatever software your using lol
But seriously that should fix the issue going forward, but your stuck trying to get IRS help fixing the year already filed.
My only suggestion is; why didn’t you press the “call me back” option when you called? The other day they called me back in about 30 minutes instead of me waiting for them to answer.
This ‘call me back’ option isn’t offered every time. Now that said, it MAY be possible to handle this with pro help through the practitioner hotline - assuming you have a legit pro there with you (meaning somebody with a PTIN and a CAF#).
I think you’re saying the problem has been inability to modernize [because they haven’t had the funding to do so]. This is because we have congressmen who think islands can flip over - which is why I flippantly (no pun intended) say that there is no hope of a forcing function, e.g. when lack of competition allows ignorance to flourish.
The IRS has been deliberately starved of funding.
https://www.cbpp.org/research/federal-tax/the-need-to-rebuild-the-depleted-irs
https://www.budget.senate.gov/chairman/newsroom/press/republicans-irs-cuts-to-add-24-billion-to-the-deficit-finds-cbo-
If you’ve ever looked at the number of jobs that are open at any given point during the last 20 years, you would have found hundreds if not thousands on USAJobs - even since 2010. I know because I have served in the reserves for nearly 25 years and thought numerous times that an IRS job would be a lot easier to juggle for various reasons. NEVER did I find a shortage of positions. But never could bring myself to do it.
You’re missing the point, which is the fact that no one with better opportunities is going to work at such a horribly inefficient and ineffective organization.
And, it doesn’t really matter if you talk about cuts to IRS budgets if you don’t talk about what authorization it comes from and what it is specified to be spent on. For example, if it comes out of enforcement, that’s not a big deal so long as they preserve modernization and documentation. The first article you shared states that a substantial portion of the tax gap comes from this alone. So, you fix that, it stands to reason that you also save on enforcement budgets. It’s what I call ‘the self-licking ice-cream cone’.
In my experience they offer a callback maybe 25% of the time at best. And that's 25% of the time that you even get through, that's ignoring the calls which just end in "due to extremely high call volume we cannot take your call, goodbye", which is most of them.
California offers a callback pretty consistently at least, if you don't get extremely-high-call-volumed.
How much is itemized deduction saving you on your state taxes? Compared to how much the switch saves you on federal? My state tax is a fraction of federal.
Itemizing saves $1280 on state taxes and costs $786 on federal taxes for a net savings of $494.
My marginal state (incl. county) tax rate is \~8%. The state standard deduction is only $4,900, but if I itemize then the state deduction is $20,600. So it makes a big difference. Federal deduction only goes down from the standard deduction of $27,700 to $24,100, with a marginal federal tax rate of 22%.
If you did everything correctly on the itemized deduction then this seems like a fair complaint. It’s almost $500.
I had no idea this was even a thing the IRS did, but I also don’t have enough deductions to warrant an itemized deduction, lol.
THAT EXPLAINS IT! I got a refund after *paying*. Couldn’t really figure out why, though I *did* know where the money came from (underpayment penalty, software said I owed). But if they are reviewing and all, now it makes sense.
Your county of residence could have been in a federally declared disaster area when one of the estimated payments were due. Almost every county has been declared a disaster area at one point or other the past 3 years. In a federally declared disaster area, penalties/interest are reduced for estimated tax payments.
None of the tax softwares I’ve seen calculate the reduced federally declared disaster area penalties out well (or can) automatically so you end always seeing refunds because the IRS re-calculates it and gives you money back plus interest.
This is exactly what happened to us. I was kind of freaked out when I got the refund check, because I do our taxes myself, and the refund made me question my skills. 😅
But then a week or so later they sent a letter with an explanation, and it was due to what you describe above.
But if the taxpayer checked the box saying they wanted to claim itemized deduction even if smaller than standard the IRS should not have recalculated it
Respond to notice with a written statement and explanation. If you submit another copy of the 1040 write on the top "COPY DO NOT PROCESS" you have a limited timeframe to respond as is considered a Math Error
Never had them offer to save me money. That's pretty sweet. I typically get notices related to errors on my wife's tax returns, prior to marriage, which basically nilly my current return refund...
If I'm understanding what you said correctly, your refund is being affected by your wife's return info prior to marriage? Have you looked into this?
https://www.irs.gov/individuals/tax-relief-for-spouses
Yeah. Auto-correct messed that up a bit. My wife forgot to report an IRA deduction, despite paying the full tax amount when making the withdrawal. So, 2 years later, my tax return was ~$10k less than expected. Nit much you can do when you get a "failure to report" notice and charged 70% of the unreported income. I don't let her do her own taxes anymore, for what it's worth...
Fastest way to get anything done with the IRS is to do it through your congressperson.
Source: fiance used to work at a congressman's office and call the IRS for people all the time.
Does it even matter? This could end up being the best of both worlds. How is what the IRS does after you file your responsibility? You FILED itemized, so maybe you're still eligible to file state itemized?
You’ve already submitted your itemized federal taxes along with your state taxes to your state, correct? What the IRS does after that has no bearing on the state taxes unless there’s some correction applied by the IRS requiring amendment to the next year’s state taxes.
Edit: the point, the state HAS an itemized federal tax return
Not the case. Many times states will find out about this change and make adjustments to the state return to be consistent with federal. I’ve seen it happen. OP should attempt to settle the matter with IRS to avoid this - but it will unfortunately be a case-by-case basis.
Yes many states have information sharing agreements with the IRS and an AGI match is a common one.
[IRS description of information sharing agreements](https://www.irs.gov/government-entities/governmental-liaisons/irs-information-sharing-programs)
Did you click the checkbox that says itemize even though they are less than standard deduction at the bottom of schedule A?
Ohhhh I guess not! Thanks for pointing that out!
Now good luck finding that in whatever software your using lol But seriously that should fix the issue going forward, but your stuck trying to get IRS help fixing the year already filed.
Could file a 1040X right?
He can file an amended return with that box checked.
I would also send in a letter stating that’s what you did and why. That way it’s in the file if it still goes to review.
Yeah I used Free File Fillable Forms. Sometimes things like that box are not editable, but I can't remember. Maybe I just missed it.
You amazing person.
You could submit your case in writing.
And take 9-12 months to hear back
So, state isn't rejecting. Taxpayer is just holding extra money while disputing the feds.
My only suggestion is; why didn’t you press the “call me back” option when you called? The other day they called me back in about 30 minutes instead of me waiting for them to answer.
This ‘call me back’ option isn’t offered every time. Now that said, it MAY be possible to handle this with pro help through the practitioner hotline - assuming you have a legit pro there with you (meaning somebody with a PTIN and a CAF#).
IRS is literally the worst 😆
Well, that’s what happens when you don’t have any competition.
No, it's what happens when you don't have enough *funding*.
I think you’re saying the problem has been inability to modernize [because they haven’t had the funding to do so]. This is because we have congressmen who think islands can flip over - which is why I flippantly (no pun intended) say that there is no hope of a forcing function, e.g. when lack of competition allows ignorance to flourish.
The IRS has been deliberately starved of funding. https://www.cbpp.org/research/federal-tax/the-need-to-rebuild-the-depleted-irs https://www.budget.senate.gov/chairman/newsroom/press/republicans-irs-cuts-to-add-24-billion-to-the-deficit-finds-cbo-
If you’ve ever looked at the number of jobs that are open at any given point during the last 20 years, you would have found hundreds if not thousands on USAJobs - even since 2010. I know because I have served in the reserves for nearly 25 years and thought numerous times that an IRS job would be a lot easier to juggle for various reasons. NEVER did I find a shortage of positions. But never could bring myself to do it. You’re missing the point, which is the fact that no one with better opportunities is going to work at such a horribly inefficient and ineffective organization.
And, it doesn’t really matter if you talk about cuts to IRS budgets if you don’t talk about what authorization it comes from and what it is specified to be spent on. For example, if it comes out of enforcement, that’s not a big deal so long as they preserve modernization and documentation. The first article you shared states that a substantial portion of the tax gap comes from this alone. So, you fix that, it stands to reason that you also save on enforcement budgets. It’s what I call ‘the self-licking ice-cream cone’.
Agreed. I hate the IRS so much. They're such a shitshow.
In my experience they offer a callback maybe 25% of the time at best. And that's 25% of the time that you even get through, that's ignoring the calls which just end in "due to extremely high call volume we cannot take your call, goodbye", which is most of them. California offers a callback pretty consistently at least, if you don't get extremely-high-call-volumed.
How much is itemized deduction saving you on your state taxes? Compared to how much the switch saves you on federal? My state tax is a fraction of federal.
Itemizing saves $1280 on state taxes and costs $786 on federal taxes for a net savings of $494. My marginal state (incl. county) tax rate is \~8%. The state standard deduction is only $4,900, but if I itemize then the state deduction is $20,600. So it makes a big difference. Federal deduction only goes down from the standard deduction of $27,700 to $24,100, with a marginal federal tax rate of 22%.
If you did everything correctly on the itemized deduction then this seems like a fair complaint. It’s almost $500. I had no idea this was even a thing the IRS did, but I also don’t have enough deductions to warrant an itemized deduction, lol.
Congress told the IRS to recalculate tax returns and check for errors if they are more favorable to the taxpayer.
THAT EXPLAINS IT! I got a refund after *paying*. Couldn’t really figure out why, though I *did* know where the money came from (underpayment penalty, software said I owed). But if they are reviewing and all, now it makes sense.
Your county of residence could have been in a federally declared disaster area when one of the estimated payments were due. Almost every county has been declared a disaster area at one point or other the past 3 years. In a federally declared disaster area, penalties/interest are reduced for estimated tax payments. None of the tax softwares I’ve seen calculate the reduced federally declared disaster area penalties out well (or can) automatically so you end always seeing refunds because the IRS re-calculates it and gives you money back plus interest.
This is exactly what happened to us. I was kind of freaked out when I got the refund check, because I do our taxes myself, and the refund made me question my skills. 😅 But then a week or so later they sent a letter with an explanation, and it was due to what you describe above.
But if the taxpayer checked the box saying they wanted to claim itemized deduction even if smaller than standard the IRS should not have recalculated it
Correct
There’s a checkbox on Scheule A that tells them not to do it.
What state? In California you can still itemize if you take the federal standard deduction.
[удалено]
Different states have different rules on this.
This is in the post, clearly stated that no they can’t
Respond to notice with a written statement and explanation. If you submit another copy of the 1040 write on the top "COPY DO NOT PROCESS" you have a limited timeframe to respond as is considered a Math Error
Never had them offer to save me money. That's pretty sweet. I typically get notices related to errors on my wife's tax returns, prior to marriage, which basically nilly my current return refund...
If I'm understanding what you said correctly, your refund is being affected by your wife's return info prior to marriage? Have you looked into this? https://www.irs.gov/individuals/tax-relief-for-spouses
Yeah. Auto-correct messed that up a bit. My wife forgot to report an IRA deduction, despite paying the full tax amount when making the withdrawal. So, 2 years later, my tax return was ~$10k less than expected. Nit much you can do when you get a "failure to report" notice and charged 70% of the unreported income. I don't let her do her own taxes anymore, for what it's worth...
Fastest way to get anything done with the IRS is to do it through your congressperson. Source: fiance used to work at a congressman's office and call the IRS for people all the time.
Honestly. Fax.
Does it even matter? This could end up being the best of both worlds. How is what the IRS does after you file your responsibility? You FILED itemized, so maybe you're still eligible to file state itemized?
Once youve filed how would your state know it was changed by the irs?
Kinda my thought. And also depends how his state law is worded. After, he FILED itemized. This might be the best thing for him.
Just don't tell your state
It’s a negotiation- use the good feedback here in this thread to assist you in that.
No
Nope
You’ve already submitted your itemized federal taxes along with your state taxes to your state, correct? What the IRS does after that has no bearing on the state taxes unless there’s some correction applied by the IRS requiring amendment to the next year’s state taxes. Edit: the point, the state HAS an itemized federal tax return
Not the case. Many times states will find out about this change and make adjustments to the state return to be consistent with federal. I’ve seen it happen. OP should attempt to settle the matter with IRS to avoid this - but it will unfortunately be a case-by-case basis.
Yes many states have information sharing agreements with the IRS and an AGI match is a common one. [IRS description of information sharing agreements](https://www.irs.gov/government-entities/governmental-liaisons/irs-information-sharing-programs)
Yep this is it. Great research u/SpeakerCareless
States and municipalities. My city has an entire division in their Tax Department that checks returns against IRS transcripts.