What Does It Mean If the IRS Is Correcting My Refund?

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If you receive a notice from the IRS, don't panic.

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In 2012, the IRS identified 2.7 million math errors made by taxpayers on their 2011 tax returns. Although the number of errors tax filers are making is steadily declining, you still stand a pretty good chance of receiving an IRS notice informing you that your refund is being corrected. The important thing to remember is that the notice is probably indicative of a minor problem that can usually be corrected with minimal effort on your part.

Math Errors

Normally, a change to your refund indicates you made a mistake on your return. If you are owed a refund and the IRS catches a mistake, the IRS will change your refund to

reflect the correction. Once the change is made, you will be notified by the IRS.

Estimated Tax

Another reason the IRS might correct your refund is that you forgot to include tax you’d already paid. For example, independent contractors and self-employed people are responsible for mailing estimated taxes to the IRS since they have no wages from which federal taxes can be deducted. If you paid estimated taxes earlier in the tax year and failed to account for it on your annual return, the IRS will deduct the estimated tax payments from your federal tax liability. By the same token, if you claim an estimated tax payment on your return that was never made, the IRS will correct your refund to reflect that as well.

Understanding Your Notice

Source: finance.zacks.com

Category: Taxes

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