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IRS Error in Tax Calculation in Schedule D Tax Worksheet (Form 1040)

Virginia Mailing Tax Relief Checks to Taxpayers

We wanted our clients to be aware that, due to an error on the Schedule D Tax Calculation Worksheet, you may see an unexpected surprise in the mail. The IRS is reviewing all potentially affected returns and issuing checks for any overpayments. Taxpayers reporting long-term capital gains and qualified dividends in their income are potentially affected by this error.

From the IRS website:

The 2018 Schedule D Tax Worksheet in the Instructions for Schedule D (Form 1040) contained an error. The tax calculation did not work correctly with the new TCJA regular tax rates and brackets for certain Schedule D filers who had 28% rate gain (taxed at a maximum rate of 28%) reported on line 18 of Schedule D or unrecaptured section 1250 gain (taxed at a maximum rate of 25%) reported on line 19 of Schedule D.


If you are affected by this error, you don’t need to file an amended return or call the IRS. The IRS is reviewing all potentially impacted filed returns, including those filed before May 16, 2019, and will send correction notices to any affected taxpayers. Taxpayers who overpaid their tax due to the error will receive refunds. If you filed an amended return because you opted to recalculate your regular tax using the new worksheet to see if it changed, the IRS is currently processing those amended returns.

Virginia Refund Checks:

Separately, the Virginia Department of Taxation is mailing refund checks to taxpayers because of the state’s tax relief refund program. Refunds of up to $110 for individuals and up to $220 for married couples filing jointly are being sent. In order to be eligible for this refund, taxpayers had to file a Virginia tax return by July 1, 2019 showing a 2018 tax liability.

From “Virginia Tax” Website:

In summary, if you owed Virginia income tax in 2018, and didn’t take any credits (or the credits you took don’t zero out your tax liability), you will be eligible for part or all of the 2019 Virginia Tax Relief Refund – up to $110 for individual filers and up to $220 for a married couple filing jointly. However, you may not receive your Virginia Tax Relief Refund if you have an offset claim. 

When will taxpayers receive the refunds?

Virginia’s Department of the Treasury has already started issuing refunds by paper check. These checks will be mailed to eligible taxpayers’ address of record by Tuesday, October 15. If you have a current forwarding order with the USPS, then your check will be forwarded to your new address.

As always, if you have any questions or concerns your tax professional at YHB is happy to assist you.

Written by Elaine Cain, CPA, and Greg Crawford, CPA, CVA | Edited by Summer Berry