Tax time could get even more complicated for about 43,000 people who received incorrect forms from the N.C. Department of Revenue.
The glitch affects 3.7 percent of taxpayers who receive a 1099-G form from the state. That’s the form that lists state income tax refunds from the previous year. Taxpayers who took a federal deduction last year for paying state taxes must report their refund in federal filings this year.
But the refund numbers on the 43,000 incorrect 1099-G forms don’t factor in North Carolina’s consumer use tax. Depending on how much someone paid in consumer use taxes, the form glitch might mean the wrong federal tax liability – forcing early filers to fill out an amended federal return.
Department of Revenue officials say they’ll send corrected forms to affected taxpayers in March.
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“They’re still compiling the list to make sure they have the right taxpayers, and they are hoping to have that out in the next couple weeks,” spokesman Trevor Johnson said.
The department hasn’t issued any formal notice about the glitch. But plenty of people have noticed the discrepancy when they compare their 1099-G forms to their original 2014 tax return.
An internal notice provided by Johnson tells department employees to expect phone calls. “Taxpayers may contact us with questions about why their refund amounts on the form are different from the actual refund they received,” the notice says.
The glitch won’t cost taxpayers if they file an amended federal return before the April 15 deadline. But if they don’t correct the amount they owe the federal government by then, they could owe interest on any unpaid taxes.
Clayton tax professional Mele Perrego said the mistake likely won’t cause big problems for her industry. Tax preparers typically refer to a customer’s tax return from last year, and they’d catch the error on the 1099-G before filing, she said.
The N.C. Department of the Revenue isn’t the only agency dealing with incorrect forms this year. The federal government announced last week that 800,000 HealthCare.gov customers were sent the wrong tax information. The recipients of the bad forms were asked to delay filing their taxes.