COVID and a tax filing question...

[Mighty Favog]

I have a friend that filed her 2019 taxes. She received a letter from the IRS that she forgot to include her health insurance documents and she mailed those back to the IRS. Then the Covid shutdown hit and her return hasn't been processed any further.

 

Now it's getting close to the filing deadline for 2020 taxes and her 2019 return still hasn't been processed. From the 2019 return she needs her refund amount (it did change with the form the IRS asked for) for her 2020 filing so 2019 refund can be taxed.

 

The IRS isn't accepting phone calls or any kinds of requests for help. So, what does she do now?

[Travis In Austin]

7 hours ago, Mighty Favog said:

I have a friend that filed her 2019 taxes. She received a letter from the IRS that she forgot to include her health insurance documents and she mailed those back to the IRS. Then the Covid shutdown hit and her return hasn't been processed any further.

 

Now it's getting close to the filing deadline for 2020 taxes and her 2019 return still hasn't been processed. From the 2019 return she needs her refund amount (it did change with the form the IRS asked for) for her 2020 filing so 2019 refund can be taxed.

 

The IRS isn't accepting phone calls or any kinds of requests for help. So, what does she do now?

You only need the last year's refund if you wish to file electronically and if you want your refund electronically. It's a security device, like a PIN number.

 

I believe you can file return by mail without needing last year's refund amount. She will just have to wait longer for refund.

 

This statement has me a little concerned:

 

"From the 2019 return she needs her refund amount (it did change with the form the IRS asked for) for her 2020 filing so 2019 refund can be taxed."

 

First, if her refund changed, it means her taxes changed, either she owed more tax so her refund went down, or she owed less tax and her refund went up. This means it was more than simply providing documentation of health insurance. It could be she didn't have full coverage over the entire 12 months, or wasn't covered under someone else's policy. So they are prorating the penalty and she owed a bit more. There a numerous reasons it could change related to health coverage.

 

Second, refunds are not typically taxable income. They are simply a return of an overpayment of taxes during the year based on the income. 

 

Example: Income was 50,000, taxes owed on that amount (made up tax number for example), $12,000. Amount withheld during the year, $15,000. Refund is $3,000. That 3,000 isn't taxable. She can buy you some new speakers without worry. The income didn't change, it's 50,000, the tax is 12,000, she just paid too much and gets a refund.

 

This isn't tax or legal advice, just an explanation of common principles at play.