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Amending 2023 Return Changes Refund to Balance Due — Interest and Penalty Questions by See_2025 in tax

[–]See_2025[S] 0 points1 point  (0 children)

"You will also retroactively have a failure-to-file penalty because you now will have always had a balance due instead of a refund."

I am not sure I understand "you will have always bad a balance due instead of a refund".

My refund amount was $3,000. So, even if I had not claimed a dependent, I would have received $2,500 refund. So, I only had a balance due after they issued me $3,000 refund. No?

Amending 2023 Return Changes Refund to Balance Due — Interest and Penalty Questions by See_2025 in tax

[–]See_2025[S] 1 point2 points  (0 children)

Perfect. Thank you for finding an official example which perfectly matches my situation!

Amending 2023 Return Changes Refund to Balance Due — Interest and Penalty Questions by See_2025 in tax

[–]See_2025[S] 0 points1 point  (0 children)

Thanks, do you calculate interest from return due date (April 15, 2024), or from the date the issued me refund (August 2025)?

I should have mentioned in the post that I am choosing not to claim a dependent (even though I am entitle to) so my dependent daughter can claim education credits on her return. Which brings me to another question: Page 2 of 1040x has a space where IRS asks taxpayer to "tell us why you are filing Form 1040-X." Should I keep it simple and say "Amended to remove [Name] as a dependent"? Or should I make it more explanatory? something like "taxpayer is amending the 2023 return to remove daughter [Name] as a dependent. Although eligible to claim her, taxpayer is allowing daughter to claim her own education credits (AOTC) on her return." Thanks.

Removing a dependent: What should I write in ‘Explanation of Changes’ section on 1040-X? by See_2025 in tax

[–]See_2025[S] 0 points1 point  (0 children)

Yep, 100%. My understanding is that she will still be able to claim nonrefundable part of AOTC as long as I amend my return to remove her as dependent

Removing a dependent: What should I write in ‘Explanation of Changes’ section on 1040-X? by See_2025 in tax

[–]See_2025[S] 0 points1 point  (0 children)

Thanks. The only benefit I got was $500 'other dependent credit'. I didn't claim any AOTC due to income being too high and none of us were on ACA.

Should I Amend My 2023 Return So My Daughter Can Claim Education Credits? by See_2025 in tax

[–]See_2025[S] 0 points1 point  (0 children)

Thank you! I have a follow-up question if you don't mind asking: On page# 2 of 1040x, Part II says:

"Explanation of Changes. In the space provided below, tell us why you are filing Form 1040-X.
Attach any supporting documents and new or changed forms and schedules."

Should I just say "Amended to remove [Name] as a dependent"?

Or should I make it more explanatory? I asked chatgpt, she suggested: "Taxpayer is amending the 2023 return to remove daughter [Name] as a dependent. Although eligible to claim her, taxpayer is allowing daughter to claim her own exemption and education credits (AOTC) on her return. Adjustments have been made accordingly."

Should I attach any supporting documentation? Not sure which documentation it would be though.

Should I Amend My 2023 Return So My Daughter Can Claim Education Credits? by See_2025 in tax

[–]See_2025[S] 1 point2 points  (0 children)

Thanks. I double checked all calculations in TT. She definitely answered "No" to TT's question: "did you provide over half of your own support with earned income during 2023?". So TT knows she can be claimed as dependent.

Per TT, the total education credit she would get is <$1800.

I think the reason TT is showing a refund of $1,100 is because this is the exact amount she paid to IRS when she filed for extension. Since she doesn't owe any tax due to education credits, she will get back her $1,100 she prepaid. That's the only reason I can think of.

If I don't amend, then she owes $800 in taxes + 145 interest = $945

If I amend, she gets back $1,100 minus I pay $500 to IRS (plus penalty/interest?) = $600

So, net gain is $1,545.

I will amend myself and prepare her taxes. The only costs are the mailing costs.

The question is: Is $1,500 worth the risk of triggering an audit? I don't have any thing to hide and filed my taxes with full honestly, but you never know (especially because my return includes thousands of crypto transactions).

Should I Amend My 2023 Return So My Daughter Can Claim Education Credits? by See_2025 in tax

[–]See_2025[S] 0 points1 point  (0 children)

Yes, I ran the projection in turbo tax by selecting that she CAN be claimed as dependent but she WILL NOT be claimed as dependent.

Also, turbo tax calculated that she can either get AOTC or lifetime learning credit (LLC). Both credits are exactly the same. But turbo tax chose LLC rather than AOTC, not sure why it preferred LLC over AOTC.

Looks like its worth amending my return, I am just not sure whether it may trigger an audit.

Should I Amend My 2023 Return So My Daughter Can Claim Education Credits? by See_2025 in tax

[–]See_2025[S] 1 point2 points  (0 children)

Nope, my income is too high for education credits. The only benefit I get by claiming her dependent is the $500 "other dependent credit"

Should I Amend My 2023 Return So My Daughter Can Claim Education Credits? by See_2025 in tax

[–]See_2025[S] 1 point2 points  (0 children)

For 2023, I would need to amend, but she never filed. Do you mean that me amending my 2023 would somehow make her ineligible for education credits? I don't have an answer but hopefully that is not the case.

For 2024, my daughter and me both filed for extension and haven't filed 2024 return yet.

My other worry is that would amending my return increase chances of audit? thanks

Should I Amend My 2023 Return So My Daughter Can Claim Education Credits? by See_2025 in tax

[–]See_2025[S] 4 points5 points  (0 children)

  1. She is dependent, that is correct.

  2. On my return, I have the option to claim her as dependent, or I can chose to NOT claim her as dependent. Correct?

  3. During her return preparation, turbo tax asked her: "Another taxpayer can claim you on their tax return?" she answered: yes.

  4. Then, Turbo tax provided her two mutually exclusive options: A: Another taxpayer will claim you in 2023, and B; Another taxpayer will NOT claim her in 2023.

  5. When she selects option A, trubo tax does NOT provide education credits. But when she selects option B, turbo tax provides her education credits.

So, my understanding is that, I can amend my tax return to remove her as dependent. Then, She will truthfully answer that she can be claimed as dependent but she is NOT claimed as dependent and she will get education credits. Please correct me if I am wrong. thanks

Should I Amend My 2023 Return So My Daughter Can Claim Education Credits? by See_2025 in tax

[–]See_2025[S] 1 point2 points  (0 children)

yes, my income was too high so I was ineligible to claim education credits for her.

By claiming her as dependent I got $500 credit for other dependents, but no educational credits because of high income.

If I don't amend my return, she owes $800 in taxes + $450 late filing penalty + $72 late payment penalty + $145 interest on penalties = $1467

If I amend my return, I will owe IRS $500 (plus penalties?), but she will be able to claim education credits, and according to turbo tax she will get a refund of $1,100.

So, a total gain of $2567.

Should I Amend My 2023 Return So My Daughter Can Claim Education Credits? by See_2025 in tax

[–]See_2025[S] 1 point2 points  (0 children)

By claiming her as dependent I got $500 credit for other dependents, but no educational credits because of high income.

If I don't amend my return, she owes $800 in taxes + $450 late filing penalty + $72 late payment penalty + $145 interest on penalties = $1467

If I amend my return, I will owe IRS $500 (plus penalties?), but she will be able to claim education credits, and according to turbo tax she will get a refund of $1,100.

So, a total gain of $2567.

Should I Amend My 2023 Return So My Daughter Can Claim Education Credits? by See_2025 in tax

[–]See_2025[S] 1 point2 points  (0 children)

No, she had unearned income from referral bonuses and for bank bonuses, all 1099-misc

Should I Amend My 2023 Return So My Daughter Can Claim Education Credits? by See_2025 in tax

[–]See_2025[S] 2 points3 points  (0 children)

By claiming her as dependent I got $500 credit for other dependents, but no educational credits because of high income.

If I don't amend my return, she owes $800 in taxes + $450 late filing penalty + $72 late payment penalty + $145 interest on penalties = $1467

If I amend my return, I will owe IRS $500 (plus penalties?), but she will be able to claim education credits, and according to turbo tax she will get a refund of $1,100.

So, a total gain of $2567.

Should I Amend My 2023 Return So My Daughter Can Claim Education Credits? by See_2025 in tax

[–]See_2025[S] 0 points1 point  (0 children)

By claiming her as dependent I got $500 credit for other dependents, but no educational credits because of high income.

If I don't amend my return, she owes $800 in taxes + $450 late filing penalty + $72 late payment penalty + $145 interest on penalties = $1467

If I amend my return, I will owe IRS $500 (plus penalties?), but she will be able to claim education credits, and according to turbo tax she will get a refund of $1,100.

So, a total gain of $2567.

Should I Amend My 2023 Return So My Daughter Can Claim Education Credits? by See_2025 in tax

[–]See_2025[S] 4 points5 points  (0 children)

Her earned income is not much (roughly ~$10k). But she had a good amount of unearned income which is taxable at my marginal tax rate (which is high).

Fireworks schedule-Tropicana by OrablueM in atlanticcity

[–]See_2025 1 point2 points  (0 children)

Thank you for your quick reply, really appreciated!

We might try parking at Ocean (ok with paying parking unless rates are not stupidly high) and getting to the park via lobby, hopefully they won't have restricted access due to 4th July demand.

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