The IRS Took Money Out Of My Refund!

I submitted my taxes on February 17th, and for the next two weeks, I checked the Where’s My Refund? tool provided by the IRS. But about 2 weeks after submitted my tax refund, it finally said that my refund was processed and approved. Great, right?

The thing is that while I thought I was getting a $2,955 refund (yay for getting married and filing a joint tax return for the first time), the IRS only approved a $2,745 refund. Where did that $210 go? Where was my explanation?

It’s been over 4 weeks now, and I expected to get a letter in the mail from the IRS explaining what happened. But now I’m going to have to contact them. Which I’m sure will be very easy now that we’re just weeks away from the April 15th tax filing deadline. Nobody else will have questions, right?

I tried to think of any reason why the IRS would take out $210 from my refund. At a 25% rate, that means that they found $840 in income that they think I did not report. That’s a lot more than just a slight oversight!

I am brutally honest with my taxes and try to report any and all income I earned during the year. However, I did find about $85 from a 1099 that I had not accounted for from an investment funds account I no longer use.

You can’t hide income reported on 1099 forms from the IRS. When, in this case, a bank sends you a 1099 form, they send the same one to the IRS. So if you don’t report it to the IRS, it’s glaringly obvious.

But that $85 was only a small fraction of the unaccounted for funds that the IRS thinks I did not include in my tax return.

I did some research and found information about IRS notices and letters. There are lots of reasons (210 options, according to their website) why you might get a letter from the IRS. For my situation, it would likely be the CP20 Notice, which you receive when the IRS believes “you incorrectly claimed one or more deductions or credits. As a result, your refund is less than you expected.”

So for now, I just wait. I already expected to receive some communication from the IRS, but now I’m going to have to try and seek out the information myself. I will definitely be following up with another post when I find out what was the issue was!

12 Responses to The IRS Took Money Out Of My Refund!

  1. Money Beagle says:

    That’s interesting. I never heard of that. I guess maybe if it is a legit reason, it’s better that they do it now versus down the road at an audit, when you likely would have to pay a lot more. Keep us updated, I’m sure I’m not the only one that’s interested in the outcome.

  2. Austin says:

    A big refund? You lucked out on that one. The first year that my wife and I were married we owed about 1,100 bucks due to both of us having decent-paying jobs. If only it was as easy as checking the “married” box on the W4!

  3. Leslie says:

    If you owed anything, there is interest on that too.

    I had a stupid mix-up with NYS taxes last year. I was in the middle of solving an issue where they said I owed them from 5 years ago. Since it wasn’t settled when I filed my Federal taxes, NYS took the money I “owed” directly from my federal refund. It then took even more paperwork to get it all refunded back to me.

  4. That is weird. Glad they only gave you 200 options to why your refund was smaller than predicted. Good ol’ IRS! Good luck with it al Daniel.

  5. Adam P says:

    You don’t always owe interest on a balance due.

  6. They are slow but you will get the explanation. Keep in mind it could be an error on their part as well. The IRS system is by no means 100% accurate.

  7. That is unbelievable, Daniel. Good luck and let us know how it goes.

  8. Ira says:

    I am sure you will get a letter from the IRS. This has happened to me several times, in both directions (meaning that sometimes I over reported and sometimes underreported income). The issues could be: underreported income, a deduction that they do not accept, or a math error.

  9. Jose says:

    I’m glad you posted this. I had to do a quick check on mine and make sure that they didnt do the same to me (they didn’t). I’m curious to see how they justified reducing your refund. Good luck on hearing back from them. If you don’t you may want to try their taxpayer advocacy office (I think thy are regional). Yes, believe it or not, they have an division dedicated to helping Tax payers with problems!

  10. It is all one big joke. Why in the world they would be able to take your money without telling you is completely ridiculous. At the very least they should have to notify you along with the prerequisite instructions on what you have to do if you have any disagreements. However, that’s just are tax dollars hard at work. They probably had their actuaries tell them if they did it to enough people, since most people won’t notice or fight, it is actually a profitable move.

  11. I think they automatically fix mistakes detected on your tax return and just send out the correct amount. Honestly, it saves you time in the end, and they’re less likely to make a mistake than you. That’s my 2 cents.

    You filling in your numbers and deciding what your return should be is hardly “official”. I’ve had it work the other way where they made a change on my return and sent me more money than I asked for. So I would understand if it went the other way too. As long as it goes both ways, I’m fine with it.

    But there should be an appeal system or a way to find out WHY the change was made. I’m pretty sure when they increased my return, they sent a letter explaining why, which was very nice to receive.