I felt good about filing my taxes early, but I ended up owing more than $400 when I had to amend my return

The author, Ellie Bozmarova. Courtesy Ellie Bozmarova

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• A couple hours after filing my taxes, I received a 1099-MISC I hadn't been expecting.
• If I had known about superseding tax returns, I would've used one — it's easier than amending a return.
• I ended up owing money as a result, but I'll still be inclined to file early in the future.

I submitted my federal and state tax returns on the evening of January 31. Thinking all of my employers and banks had sent me the necessary forms, I felt on top of the world! I usually do my taxes by early February, and up until now, my taxes have been fairly straightforward. Throughout the year I lean toward over-paying and plan for a refund around tax time. I like receiving that tax refund.

However, a couple of hours after I filed my taxes, none other than mid-bankruptcy cryptocurrency exchange Voyager Digital sent me a 1099-MISC. I had already listed my crypto transactions on my tax forms, but realized it'd be good to report the income that I received from crypto rewards.

By leaving cryptocurrency in my Voyager account month after month, I'd received rewards, much like earning interest in a bank account. Because the Voyager bankruptcy is not yet complete, it's not possible to deduct losses at this point.

So, on February 16, I went back into my tax return and started amending my federal and state returns. It's best if you can avoid this process, but I felt I had no choice. Sometimes being on top of things is a curse.

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Superseding vs. amended returns

Now, I'm not a tax expert. This year I used tax software to do my taxes. ("Never again," I say each year.) Throughout the year, I use a self-employed accounting software to track my income and expenses. Unfortunately, I didn't know until after I re-filed that it's possible to file a superseding tax return instead of an amended return. This would have been game-changing information.

A superseding tax return is an option to make changes to your filed return. You might have available to you if you filed your taxes early in the tax season. Instead of creating an amended return, it replaces your entire original tax return. It can reduce the likelihood of IRS penalties. The IRS now allows people to submit superseded returns electronically. So if you're reading this early enough in the tax season and may need to amend, check with your tax advisor and see if you can file a superseding return instead.

Fixing my tax mistake

Using my tax software, I dove into help articles as well as their guided system to amend my return. In total the process took about an hour. The confusing part was that the system wanted to count the 1099-MISC as self-employment income (as if it was a 1099-NEC), which it was not. After some trial and error, I was able to remove this connection. Taxes can be stressful in general, because the cost of doing something wrong can be high. This was no exception.

If you're dealing with cryptocurrency or other unique types of income for the first time this year, 1099s are a world unto themselves.

Voyager sent out 1099-MISCs, which simply listed income and not individual transactions. The IRS considers cryptocurrency to be property, so every time you buy or sell a cryptocurrency, it's considered a capital gain or loss. Other cryptocurrency organizations typically send out 1099-Bs, which include details about your transactions.

There are several other types of 1099s, including 1099-INTs, which show your interest income. There are about seven more types of 1099 forms. I'm sure my future tax advisor will know about all of them. The organizations that issue these forms to you also send a copy to the IRS, so if you receive one, it's a good idea to attach it to your tax return as well.

I ended up owing more money

Alas, I wasn't awarded any money, gold stars, or brownie points for attempting to be thorough. Not counting my original refund, with the amended returns, I owe, across state and federal, an additional $404.

Even after this experience, I would still do my taxes as early as possible in the tax season to avoid the fever pitch of last-minute filings. But there are times when it's advantageous to wait. I'll have to ask my tax advisor about that next year.

What do people do with their tax refunds if they don't owe money on their taxes? Some put them into savings, some pay down debt, some spend it on vacations. As it goes, most of the money I receive will make its way back to the IRS in the form of estimated tax payments for my business in April. But I do think some ice cream is in order, and a pat on the back for putting on my "grown-up" hat once again, messy though it was.