IRS Adjusted Refund Letter: What to Do When the IRS Changes Your Tax Return Check Amount

Coming home from work, checking your mail, and seeing a letter addressed from the IRS can send you into a state of panic. Did I file incorrectly? Am I in trouble? What did I do wrong? These are all questions you may be asking yourself as you slowly tear open the envelope. If you see that the IRS sent a notice claiming they made a change to your refund check amount, there’s no need to be alarmed. Every year, the IRS issues thousands of adjusted refund letters to taxpayers across the country. An IRS adjusted refund letter doesn’t mean you did anything wrong. Instead, it’s a simple notice letting you know a change has been made to your refund. If you’ve received one of these letters from Uncle Sam, our tax professionals are here to help you respond!

Step 1: Read

Step 2: Respond

Step 3: Pay

Step 4: Keep a Copy

Why was I notified by the IRS?

The IRS sends millions of notices to Americans each year for a variety of reasons. From information requests to identity theft notices, the IRS handles a lot. One theme of notices regards adjustments made to your tax return. Whenever the IRS makes an adjustment to your return, they will send you a notice with the letters “CP” followed by a unique number on the top.  These different numbers indicate their reason for making an adjustment to your return.

Adjusted refund amount means the IRS either owes you more money on your return, or you owe more money in taxes. For example, the IRS may use your refund to pay an existing tax debt and issue you a CP 49 notice. Or, a simple math error can turn out in your favor with a CP 12 notice that corrects one or more mistakes on your tax return. For example, if you ended up making an overpayment on your taxes, the IRS would send you a refund check for the amount you overpaid in about 4-6 weeks. These types of notices do not mean you are in trouble and you usually don’t have to respond to these common IRS notices, unless you disagree.

Understanding your notice

If you get an IRS adjusted refund letter in the mail, you may be confused about what you did wrong on your tax return. When you receive a letter from the IRS by mail, they will always provide contact information in the top right corner by the CP number so you can ask questions, or get more information on your case. Each notice will typically provide details  on:

  • What parts of your return or account the IRS is making changes to
  • What information the IRS needs from you
  • Why the IRS is making the change
  • Why the IRS needs your information
  • When you should send your reply (if needed)

As previously mentioned, the IRS sends notices for a variety of reasons. You can always perform a notices and letters search on the IRS website to get more information on the notice or letter you received, along with answers to many tax refund FAQs. The main reasons you’ll receive an adjusted refund letter from the IRS is because:

  • You have a balance due.
  • You are due a larger or smaller refund.
  • The IRS has a question about your tax return.
  • The IRS needs to verify your identity.
  • The IRS needs additional information.
  • The IRS changed your return.
  • The IRS needs to notify you of delays in processing your return.

If you have questions regarding your notice, simply contact the IRS with the information provided at the top of your letter. If you’ve lost your notice, you can call one of the following toll-free IRS phone numbers below between 7 am and 7 pm:

  • Individual taxpayers: 800-829-1040; (800) 829-4059 (TDD)
  • Business taxpayers: 800-829-4933

Next Steps

Now that you’ve looked over your IRS notice, it’s time to decide whether you need to take action or not. If you agree with your IRS adjusted refund, you typically do not need to respond. However, if you disagree with your notice or if your notice requires you to send in a response, you must reply accordingly. If you’re unsure on how to respond to your IRS notice, our tax experts can help you do so. Or, you can follow these steps below if you’re notified by the IRS:

Step 1: Read

Every IRS notice contains pertinent information on your IRS refund status and why an adjustment was made. Take time to thoroughly read your notice and compare it with the tax return you filed. Doing so will allow you to see any mistakes you may have made or, identify any errors from the IRS.

Step 2: Respond

Some IRS notices are time-sensitive and require you to respond by a specific date. This is normally the case when you owe money. It’s important to respond as soon as possible before the deadline so that you can:

  • Minimize additional interest and penalty charges.
  • Preserve your appeal rights if you don’t agree with your notice.

Step 3: Pay

For IRS notices that require a payment, you must abide and pay as much of the refund as you can. The IRS offers various payment options that work for your financial situation, such as a payment plan or having your account status changed to “Currently Not Collectible.”

Once you’ve figured the amount you owe, you can employ one of the IRS’ many payment methods to satisfy your tax balance. You can pay online, pay in cash at a retail partner, or send in a check or money order. Regardless of your situation, the IRS is willing to work with you. However, ignoring this notice will result in you owing more money from penalties and accrued interest. If you’re not sure which payment plan is right for you, you may consider speaking with a tax professional to help you evaluate your options.

Step 4: Keep a Copy

It’s extremely important to maintain a copy of all your tax records. It’s a common tax refund myth that only the rich can get audited. IRS audits typically begin three to four months after the filing deadline, but some audits can be performed years after it was received. Keeping a copy of all of your tax returns, notices, and letters will make situations like these easier to handle.

How to make corrections to a tax return

Mistakes happen, and that’s life. You may not believe it, but the IRS is staffed by people who make mistakes as well! The IRS is never out to get you, they are simply doing their job so they can collect taxes that benefit the public as a whole. If you made a mistake on your tax return or want to make corrections to a tax return from the previous year, you can correct this with an amended return. An amended return allows you to resolve the problem and claim a more advantageous tax return or make a payment if you realized you filed incorrectly.

Regardless of whether you owe money or are owed money, it’s important to comply so you can rest assured knowing the IRS doesn’t associate you with people like Al Capone. Amended returns also allow you to explain your situation in part III of Form 1040X so they can understand why this amendment is occurring. However, once filed, all you can do is wait. It can take up to 16 weeks for your amended return to be processed, so, if you get antsy you can always check your tax refund status of your amended return online or by calling.

Can I receive a fake IRS letter?

Yes, you can. Sadly, there are people out there who use the IRS name to swindle unsuspecting taxpayers into giving them their money. The IRS has a Report Phishing page where you can report any suspicious activity. The IRS will never contact you through email, text, or social media channels to request information. If you fall victim to one of these scams, report it immediately.

Conclusion

Bottom line, never be worried if you receive an IRS adjusted refund letter in the mail. Often, the notice is not a big deal and if you made a small miscalculation on your return, the IRS will fix it for you and simply send a notice. However, there are cases where you may owe money or where the IRS owes you money. Whatever the case may be, it’s important to handle the notice right away by consulting with a tax professional or taking matters into your own hands.

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