Do I e-file 2017 first?

Technical topics regarding tax preparation.
#1
gstax  
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Do I e-file 2017 and apply the refund towards 2018, while IRS process prior year amendment returns with amounts owed from client?

I'm guessing the IRS would automatically apply any refund to those years where there is a liability?

Please let me know if that is a correct way to do it, or if client has to send all the returns together to be processed at the same time?
 

#2
taxea  
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Never send all returns in one envelope. They should be sent individually with check for payment and certified, return receipt requested. If you do this then the IRS should not charge the current refund to an older year. If you have an extention on 2017, I recommend you not file the return until the USPS card is returned to TP.
 

#3
skassel  
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I have filed multiple returns for many clients many times and I have always put them in one envelope. On the top of each return, in RED, I write 1 of 4, 2 of 4, etc. Never once had a problem. I did the same thing when I was a Revenue Officer...obviously they didn't go through the regular mail system, but once they arrived at the Service Center, they are processed in the same manner.

Depending upon the specifics of the case, there may be a refund hold if there are a bunch of unfiled years. If so, there is nothing you can do to remove that hold. There is no way to find out if that hold exists. If shows up on nothing you would receive or to which you have access.
Steve Kassel, EA
 

#4
gstax  
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Can I send the prior years only and let them assess the liability first without payment? as the TP wants to apply that last year refund to the prior years?
 

#5
gstax  
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skassel wrote:I have filed multiple returns for many clients many times and I have always put them in one envelope. On the top of each return, in RED, I write 1 of 4, 2 of 4, etc. Never once had a problem. I did the same thing when I was a Revenue Officer...obviously they didn't go through the regular mail system, but once they arrived at the Service Center, they are processed in the same manner.

Depending upon the specifics of the case, there may be a refund hold if there are a bunch of unfiled years. If so, there is nothing you can do to remove that hold. There is no way to find out if that hold exists. If shows up on nothing you would receive or to which you have access.



Thank you, that is perfectly okay, and the answer I was looking for. I guess I could file prior years, and hold onto the last year's return to eventually e-file it. As that is the one they want that refund applied to for prior years.

Since they are military family overseas they have an automatic extension of time to file.

Cristina
 

#6
Jake  
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Has a person who never filed 2016 until April 2018. There was a significant overpayment for 2016 that we wanted to apply to 2017 to avoid an underpayment penalty on 2018. Got an extension for 2017. Filed the 2016 in April - going to wait a month so the 2016 overpayment is credited to 2017 as requested. Hope that works.
 

#7
gstax  
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Jake wrote:Has a person who never filed 2016 until April 2018. There was a significant overpayment for 2016 that we wanted to apply to 2017 to avoid an underpayment penalty on 2018. Got an extension for 2017. Filed the 2016 in April - going to wait a month so the 2016 overpayment is credited to 2017 as requested. Hope that works.


Thank you! Somehow it helps but my case it’s the other way around. They have a refund for 2017. I’m filing amended returns for 2015 and 2016 which they would have some liability on, which is the money they had initially gotten in a prior refund for each year. If I file 2017 first how do I tell the IRS to keep the money there to eventually apply it to the mailed 2015 and 2016 amended returns?
 

#8
CathysTaxes  
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gstax wrote:
Jake wrote:Has a person who never filed 2016 until April 2018. There was a significant overpayment for 2016 that we wanted to apply to 2017 to avoid an underpayment penalty on 2018. Got an extension for 2017. Filed the 2016 in April - going to wait a month so the 2016 overpayment is credited to 2017 as requested. Hope that works.


Thank you! Somehow it helps but my case it’s the other way around. They have a refund for 2017. I’m filing amended returns for 2015 and 2016 which they would have some liability on, which is the money they had initially gotten in a prior refund for each year. If I file 2017 first how do I tell the IRS to keep the money there to eventually apply it to the mailed 2015 and 2016 amended returns?

I don't think you can because you are filing amended returns. If your client didn't file then the IRS would probably hold on to the refund.
Cathy
CathysTaxes
 

#9
skassel  
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gstax, go ahead and file 2017 and see what happens. Nothing else you can do. It might work, might not. Let us know what happens.
Steve Kassel, EA
 

#10
Joan TB  
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skassel - I disagree with your advice. The IRS won't know there is any amount owed to them until the prior year amendments are done. It depends on exactly what TP wants to have happen.

If 2017 is filed first, and refund from 2017 is applied to 2018, then taxpayer will owe the amount due when the prior year amendments are filed.

If the amendments are filed first, then the 2017 overpayment will (hopefully) get applied to the prior years first. Then TP would (presumably) need to make ES pmts for 2018, if willing and able. In this case, I would NOT mark the 2017 return as "apply refund to next year" NOR as a direct deposit, but would instead leave it as a paper check. If papercheck arrives, TP can void it, send it back, and ask IRS to apply it to prior year amounts due. (For some reason, I have noticed that IRS is more likely to apply overpayments to prior years when a papercheck is involved, then direct deposit. Don't know why.)

From a cash flow standpoint, under the first scenario, TP has to pay on the old years while not getting as immediate a benefit from the 2017 overpayment. Under the second scenario, TP will (probably) get a benefit from the refund used to pay off the prior years, but then has cash flow options about when to make ES pmts on 2018.
 

#11
Frankly  
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IRS doesn't have a quick and easy method to juggle balances due and refunds from various years. Taxpayer doesn't have a lot of control over it. It's not like getting on your on-line banking and moving money around between your various accounts.

The most straight-forward method to "apply" a refund to a prior year is to wait for the refund to arrive and then write a check to pay the assessment on the prior year.

Or better yet enclose a check for the tax due when filing the amended return. Let whatever refund there may be from another return get refunded.
 

#12
skassel  
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Sorry, JoanTB, but that is not correct. With 31 years experience handling ONLY delinquent taxes, I am 10,000% certain that IRS puts refund holds on accounts with unfiled returns.
Steve Kassel, EA
 

#13
Joan TB  
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skassel - OP didn't say unfiled returns, he said amending prior years. Only unfiled year is 2017, which is apparently extended.
 


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