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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
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Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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SEP Contribution Error on return already e-filed.

Customer Question

I e-filed my Federal and NC state tax returns on Monday. They have been accepted by both entities and I expect to receive refunds from both within the next week or two. I realized on Tuesday, unfortunately, that I made an error when I filed my return. I reported a SEP IRA contribution on Page 1 of the 1040 as $2,038. The correct amount should have only been $383. I am self-employed with about $2,300 of net Sch. C income. My husband receives a W-2 and participates in a qualified retirement plan through his work. He and I file jointly and our AGI exceeds the threshold amount for me claim the excess as an IRA contribution. I have made SEP contributions in the past - NOT SARSSEP - just plain old SEP.I assume I will need to file a 1040X to correct the error. I have not yet given any money to my investment adviser for my SEP contribution this year.

My questions are: When should I file the 1040X? (now, before April 15th? wait until I get my refunds?) What can I do to prevent paying a penalty on the excess contribution?I accept that I will owe money to both the Federal and State, but is there anything I can do to limit any penalties or interest because of this mistake?Any other advice?Thanks - Sue
Submitted: 11 years ago.
Category: Tax
Expert:  Jon Andrews replied 11 years ago.

You can file the 1040X at any time. It would probably be in your best interest to file it before 4/15. If you later get into a discussion with the IRS about penalties, having taken early action will work to your advantage.


You should not have to pay a penalty on the excess contribution.


The earlier you correct the mistake, the less the interest will be.


If you should get a letter from either authority (IRS or NC) assessing a penalty with repsect to this transaction, you should send a letter stating the facts and requesting that they abate the penalty due to the fact that you took action quickly to resolve the issue.


[email protected]

Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience: I deal with all levels of tax planning and controversy - from the ordinary to the complex.
Jon Andrews and 3 other Tax Specialists are ready to help you
Customer: replied 11 years ago.
Reply to Jon Andrews's Post: Thanks for your help - I guess I should file the 1040X now, before April 15th? Should I expect to get notices or letters from them on this? (I hate those things)    
Expert:  Jon Andrews replied 11 years ago.

If you file the 1040X now and pay the tax, the only notices you should recceive would be one acknowleding the filing and another adding any interest. However, in my experience, if the amended return is filed before the initial filing deadline, there generally is no interest added because the tax is not "late".


jon

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