How to Change the Application of Your 2019 Tax Overpayment

As the COVID-19 situation continues to develop, taxpayers who filed returns early in tax season and applied a 2019 overpayment to their 2020 tax return may find themselves rethinking that decision. These taxpayers may now be facing financial hardships that would be alleviated if they had the money refunded and may also be realizing that 2020 taxable income will not be as high as they had originally projected. Is there any mechanism that these taxpayers can use to request their 2019 tax refunds now?

The normal process for making changes to a previously filed return involves filing an amended return (Form 1040X for an individual). This process does not allow the taxpayer to change how their overpayment is treated. However, National Taxpayer Advocate Erin M. Collins has suggested that another avenue is open to these taxpayers. If a taxpayer files a second return before the due date, this return is considered to be a “superseding return.” This return is treated as the taxpayer’s original return, and the limitations imposed on amended return do not apply to it. Thus, a taxpayer can choose to file a second return before the due date and use that return to request that an overpayment be refunded, rather than applied to 2020 tax obligations. The Taxpayer Advocate notes that the deadline for this year is July 15, or October 15 for taxpayers who filed for an extension before filing their initial return. Thus, taxpayers will have until these dates to change how their 2019 tax overpayment is applied.

While this sounds simple, the Taxpayer Advocate notes a potential catch: IRS operations have been scaled back significantly due to COVID-19. Superseding individual returns must be filed on paper, not electronically. Until recently, the IRS was not processing returns received on paper. Although the IRS has recently begun to process these returns, taxpayers should expect delays as the IRS works through a backlog of mail and return processing. Nonetheless, filing a superseding return could allow a taxpayer to receive a refund before next year’s tax filing. Providing bank information for direct deposit should speed up the process by four to six weeks. Since the IRS is expected to process paper tax returns in the order received, taxpayers who would benefit from filing a second return should do so as soon as possible.

(Please note that the Taxpayer Advocate Service is an independent organization within the IRS that is designed to protect taxpayer rights. Its views do not constitute official IRS guidance or policy.)

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