How to fix declaring qualified dividends?

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    Dear experts, please help!

    I filed 2019 return without filling in line 3a (Qualified Dividends). Simply forgot that box. Rest of numbers were correct (since they all assumed correct qualified dividends on line 3a).

    IRS sent me a (CP11) notice with bill + penalties because they assumed I miscalculated my tax liability – their calculation used $0 qualified dividends and so all my ordinary dividends from line 3b were charged the full rate instead of the 15%.

    What’s the best way to correct this?

    Do I have to fill out 1040-X?

    If so, I looked at instructions for 1040-X but I am not clear what lines to fill in there since all my numbers would not have changed from original filing.

    1040-X has two high-level options:
    (A) You are only changing information.

    (B) You are changing amounts on your original return or as previously adjusted by the IRS.

    In my case, I am not clear if the bill and notice I have from IRS constitutes an adjustment by them or not.

    If I need to follow instructions for (B), do I fill out all rows with unchanged numbers or only line 6? And then in column A of line 6 should I put what IRS thinks my calculated tax was instead of how I filed it? That would show the change I suppose.

    • This topic was modified 1 year, 5 months ago by Justin.
    • This topic was modified 1 year, 5 months ago by Justin.

    I would be inclined to file 1040X, but assuming your original return was correct except for neglecting to fill out the QDIV line, then all entries would be the same as original, so col A(original) and col C(corrected) would be the same with col B (change) =0.

    In Pt III,you can explain what happened (a simple omission) and that nothing really changed.

    I do not understand why you do not know if IRS has made an adjustment or not. Are they asking for more money? Can you get their result by making QDIV =0?


    (Apologies is this is a duplicate post – website says it is but refreshing the page shows my earlier post got lost.)

    Thanks for the reply, Kaneohe.

    Regarding “I do not understand why you do not know if IRS has made an adjustment or not. Are they asking for more money?”:

    Yes, they are asking for more money. They sent me a notice saying I owe more taxes than what I specified. There are a lot of things on that notice including “We found a miscalculation on your 2019 Form 1040 which affects […] Tax Computation. We changed your return to correct this error. As a result, you owe $…”

    Later they have a table comparing my vs their line numbers for lines 8b (AGI), 11b (taxable income), and 16 (total tax). 8b and 11 are identical. Line 16 shows the difference. They do not show any other lines for my return but only these 3.

    Yes, if I make QDIV 0, I get the same difference as what they computed. So I am sure this is related to my omitting that line.

    Regarding filling out 1040-X, I think you are saying I indeed fall into category
    (B) You are changing amounts on your original return or as previously adjusted by the IRS.

    rather than the simpler category (that only needs part III)

    (A) You are only changing information.

    With that in mind, regarding filling in the same numbers for column A and column C, according to 1040-X instructions “Column A. Enter the amounts from your original return. However, if you previously amended that return or it was changed by the IRS, enter the adjusted amounts.”

    I thought this means that I may have to enter IRS amount in column A for the the tax line 6 on 1040-X, as I might be falling under the “or it was changed by the IRS” part?

    Another question that comes to mind – what to attach to 1040X?
    Should I attach new form 1040 with correct box 3a filled in and the same otherwise? For example, after I filed my original 1040, I still had amount due as per my original (correct) calculation, so I sent another payment after filing original 1040X. Should my newly attached 1040 now reflect that payment as having already been made or I would file it as if I did not make that payment yet, just like on the original return?

    What else can I do? Somehow after they get my 1040-X, would they relate it to the notice they had generated? They provide a phone number to call them about it if I disagree with the amount due but the phone number ends up saying they are too busy and to call another day (I will try tomorrow but something tells me I will keep getting same message or will get someone on the line that perhaps won’t know enough?). Another option is to apparently ask for reversal in writing but then they say they might send it for audit and that does not sound like fun.

    Thanks a lot for your help!


    Unfortunate problem for a minor error………If you have the patience for a phone call, that might be the simplest since you can correct any misunderstandings right away. My recent experience……announcement says 15-30 min wait for rep………usually turns out to be closer to 30min. Good luck and listen carefully to the phone tree choices so you end up in the right place.

    Somehow I think a simple narrative explaining what happened and with the correct tax will be the simplest. You might also show that you can get the IRS tax number with 0 QDIV. I have some concerns that adding too much else will end up confusing rather than enlightening. Of course you will need to give them the correct QDIV #.

    Good luck! I don’t think you’ll ever make the same mistake again after this.

    • This reply was modified 1 year, 5 months ago by kaneohe.
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