If you worked throughout of the entire year, getting a tax refund is important to you. However, waiting for your refund to arrive is frustrating, but it is even more frustrating when you get less than what you expected or no refund at all. Therefore, today we are discussing some of the reasons the IRS may change your refund and what to do if it happens.
Each year, 80% of taxpayers get a refund. However, millions of taxpayers are shocked when it comes because it is less than what they anticipated or they don’t get a refund at all. Below, we are covering the most common reasons for the IRS to change tax refund amounts.
You Owe Them Money
More than 17 million taxpayers owe the IRS money. Therefore, to get the money that is owed to them sometimes they have to deduct it from refunds. Keep in mind, when you owe the IRS, they can take your refund for up to 10 years after you have owed them money.
Your Spouse Owes Them Money
If you file a joint return with a spouse who owes the IRS (this includes child support and student loan debt), the IRS can use the joint return refund money to pay off their debt. If you don’t want your portion of the refund to go towards their debt, you have to file Form 8379. Three months after the form has been filed, the IRS will send you your share of the refund. Keep in mind, before you marry someone you should know about his or her financial situation.
Error on Return
It is not uncommon for the IRS to hold refunds that were given because of a tax credit. This is especially true for tax filers who claim the EITC or Child Tax Credit. If you are under an audit, you can also have your refund held.
When the IRS is holding your refund, you will receive a notice from them for a request for more information. As long as you turn in the information by the deadline, you will still receive your refund if it is deserved.
TurboTax will accurately calculate all tax credits, based on your answers to easy questions.
The IRS will stop refunds if they feel a fraudulent return was filed. If this happens, they will send you a notice to confirm your identity. Once your identity has been confirmed your refund will be released.
If the dependent information is wrong or someone else has claimed the dependent, the IRS will have to determine who needs to claim the dependent or you will have to fix the information. Supporting documentation may be required to clear up this dilemma.
Many times refunds are delayed because the IRS rejected your return and you did not refile. When your return is rejected, simply fix the information and refile.
In the event that you do not receive your return in three weeks, you should see what the holdup is. Your tax professional can help you with this; however, you have to make sure you have given them the authority to talk to the IRS on your behalf.
Additionally, if your refund is less than what you expected, check into it so you can see where the money went. This way you can know if it is a onetime thing or will continue happening. If it happened because of a result of an isolated incident that happened one year, ask to have the penalties removed because of good compliance history. This waiver could save you approximately $250