Several years ago, I was expecting a tax refund from the IRS of about $900. When I received the check—this was before direct deposit was available—it was for significantly less money, about $600. They included a note indicating I miscalculated one of the lines on my 1040 and provided the correct calculation.
In this case, the IRS was correct and the miscalculation was my fault. What should you do if the IRS sent a different amount than expected, but you still believe your calculations are correct?
First, check the IRS’s explanation. Now that many refunds are provided by direct deposit, you won’t receive the explanation in the mail on the same day you receive your deposit. If you don’t want to wait, call the IRS directly at 800-829-1040, but you’ll most likely be waiting on the phone as well.
If your refund is sent via check, and you’re expecting a larger refund, go ahead and cash the check. If you are right, the IRS will send another check to make up the difference. If you believe you are owed a smaller refund, don’t deposit the check. They may request you send the check back.
This article from Yahoo Finance provides some typical reasons for discrepancies. For example, some tax credits phase out as your income reaches certain levels, your estimated quarterly payments may not have been credited, your claimed dependents may not have been accepted by default, or there was an error with your Social Security number.
As with everything else, make sure to document any correspondence and decisions.
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I would have been extremely upset to find my refund $300 short. You are fortunately that they caught the error and did not do an audit on all your records.
If you miscalculated and paid more than you really owed (subjectively speaking since every refund is a result of paying more than you owe), would the IRS send a larger refund with a little note, or does it happily keep the cash when it discovers an error in its favor?
I am here to tell you that it works both ways. In my 2004 return, I didn’t claim a child related tax credit I was eligible for and the IRS caught my mistake. The $1000 tax credit turned my modest refund into something substantial and I had the honest folks at the IRS to thank!
Wow, I have never heard of that happening before, that is a total bad beat in my books.
I guess we can thank technology for the improvements to the system. :p