What To Do When The IRS Sends You A Weird Tax Refund

by Neal Frankle, CFP ® , The article represents the author's opinion. This post may contain affiliate links. Please read our disclosure for more info.

It’s pretty cool to get checks in the mail. It’s even more fun to get a check from the IRS.

But what if you get an unusual check from the IRS or a tax refund amount other than the one you expected?

Is it a time for mourning if the amount is lower than planned?

Is it a time for celebration when you get back more than requested?

No. It’s not time for either one. In fact, it’s a time for caution.

When you get a check with a different amount than you expected from the IRS it means there is a problem.

It means the IRS has a different view about your tax return than you do and that requires your immediate attention my friend.

The last people you want to be at odds with are those who work for the IRS.

So forget about the money for the time being. When you get a strange check from the IRS you need to get to the bottom of what’s going on as soon as you can.

IRS Explanations

Often the check comes in the mail with no explanation whatsoever. But don’t fret.

Sooner or later the IRS will send you a letter detailing why they sent you an amount different from the one you were expecting.

Don’t ask me why they don’t send the letter with the check. (This is just a demonstration of the genius behind the IRS and something they alone can understand.)

In the letter, they’ll try to explain the reason for the discrepancy. Sometimes it’s as simple as a tiny math error they think you made or as complicated as applying the wrong credits or deductions.

Regardless, they will explain their position in the letter they send you.

Neal’s Notes: The IRS also make mistakes. Maybe they didn’t credit you with a tax payment you made or they made another error. But even if their error benefits you, don’t be complacent. If they later discover their error you’ll be socked with penalties and interest despite the fact that they were the cause of the problem. Nice.

Interpreting The IRS Explanation

When you get the IRS letter, it will typically show the information you submitted on your tax return and compare it to the data they think should have been submitted. This will help you pinpoint where the problem is.

If this change results in additional interest, penalties levied against you, don’t worry – they’ll tell you about it in the letter too.

If you still don’t quite get what the IRS is trying to say, don’t be alarmed.

Most IRS letters provide a phone number and contact person to call. A quick conversation might be all you need to clear things up.

Even if you do understand what they are saying, I strongly recommend you send a copy of the letter and the check to your tax professional as soon as you get it.

That’s exactly what I do whenever the IRS writes to me. I let CPA Ron handle it from beginning to end. Life is good.

What To Do With The Check

Of course, I’d take my CPAs advice on what to do with the money but my preference would be to hold on to the check rather than cash it until I was sure the money was mine.

This way, if the check turns out to have been sent out in error, I can return it and the IRS probably won’t compound the problem by misunderstanding and crediting the wrong account or person.

I’ve learned the hard way how easy it is for the Treasury to misapply checks and how painful (for me) their mistakes can be.

Many years ago I sent a tax payment to the IRS for the current year.

Rather than apply that payment towards the current year, they credited the payments as a pre-payment for the following year.

Why they did this even though the amount I sent was exactly the amount I owed was a secret that mortal minds will never understand. Again, this is another example of IRS brain genius.

As a result, I showed as overpaid for the following year but underpaid for the current tax year.

And since I only discovered this mistake 6 months later I racked up all kinds of penalties and interest. That’s right.

And even this was their fault, the IRS forced me to pay the penalties and interest in order to clear up the mess and regain my sanity. Very unfair. Very painful. Very true.

If you get a check from the IRS with an amount you didn’t expect, don’t rest until you get to the underlying reasons behind the discrepancy.

Even if you have to pay your CPA to work it out with the IRS, its money well spent.

The IRS is an organization you shouldn’t trifle with Pilgrim. At least that has been my experience.

Have you ever received an unexpected amount from the IRS? What did you do? What was the reason for the discrepancy?

Reader Interactions

User Generated Content (UGC) Disclosure: Please note that the opinions of the commenters are not necessarily the opinions of this site.

Comments

Irene Frentz says July 15, 2019 at 4:15 PM

It’s not only the IRS that makes mistakes. Several years ago we unexpectedly got a big refund from the state. Apparently, unbeknownst to us they had declared my husband and myself both blind and over 65 (all in error!). It took some effort to get that fixed!

Neal Frankle, CFP ® says July 16, 2019 at 7:21 AM

WOW! Unbelievable! I wish I could say I was surprised…..but I’ve never been impressed by the IRS..

I am self employed and after paying my quarterly taxes, I owed $98.00. I sent a check for that amount but after I sent the check, I realized that I declared $15 less on my paid estimated taxes than I had actually paid. Since it was such a small amount, I didn’t think it would affect my return. A week later I got a check for $50.00. How they decided I needed money back so quickly, I have no clue. And why $50.00? I really hope it’s correct that I will get an explanation someday. I am not going to even try to call them, it’s just hopeless. However, I will not deposit the check.

Same thing happenedto me today. Called my credit union and the said call the IRS – lol!

I did my taxes on my own.. always do, have been since I was 16, never had a problem.. this year I completed (but did NOT FILE) through turbo tax (didn’t want to pay turbo tax) so I completed them and FILED them via e-file for free. In the process of filing I got the same numbers in 3 different electronic programs AND by hand. owed the same in every instance, no discrepancies (one electronic method didn’t have the functionality to take into account investment losses but when added in by hand, the amount owed was the same as the other electronic 2 methods). Then, last week I got a check for the entire amount back… Every method used indicated I owed, every method indicated I owed the same amount, I double and triple checked. In the tax year I did have a job that was contract/temporary, they did not take out fed taxes, but did take out SS & Medicare so I wasn’t surprised to owe (I was surprised at how much, but not that I owed). I believe this check is an error and refuse to cash it. What do you think?

Neal Frankle, CFP ® says June 26, 2018 at 2:40 AM

Hmmm…..I would call the IRS

I filed an amended return and owed $5 for not adding some income we got from a class action. Then I get a check and a letter for a significant sum of money. When I called they told me it was a credit for withheld taxes. They could not tell me who withheld those taxes for me. I cannot for the life of me figure this out. Should I return the check along with copies of my return and tell them unless they can say who that came from and that it was for me, I am not going to cash the check?

Neal Frankle, CFP ® says May 10, 2018 at 11:37 PM

Frustrating. Hmmm. I would ask my tax person just to be sure. Neal

Can you please let me know what other people did when they got extra money into there bank account from IRS.
I’ve been trying to talk to irs abd sort this out but they are not sure how i got extra money.
Please help me out in this matter.

Neal Frankle, CFP ® says February 5, 2018 at 9:38 PM

What happened?

This happened to me yesterday. I have no idea why I got this refund if I hadn’t even file my taxes yet! I called my bank and there is a questionable deposit noted. Turn around time is 3-5 business days. I am interested to know why.

Primary Sidebar

Who is Neal Frankle

Neal Frankle

I'm a CERTIFIED FINANCIAL PLANNER™ Professional with more than 25 years of experience. I feel very blessed and hope to share my personal financial experience and professional wisdom with readers of WealthPilgrim.
Read More »

Stay Connected

Facebook Twitter YouTube RSS

We are on YouTube

*Understand These Threats of AI to Your Retirement Income*
►Do you own shares in the Companies That Will Get Hurt by AI?
►Which Companies Are Profiting Already from AI
►Potential Drastic Economic Impact in as Little as Five Years
►How AI Will Displace Workers and Further Threaten Your Social Security
►The Direct Impact of AI on Investment Selection
►How to Profit: AI Funds for Investment

==================================================================
*Join our Facebook group and interact with others who share similar concerns and questions about retirement https://www.facebook.com/groups/retirementcrusaders*
*Download our free booklets on 10 different retirement topics https://www.retirementcrusaders.com/retirementbooklets*

====================================================================
Any products or services mentioned below may provide retirement crusaders compensation. These are the services we like or use and recommend:
====================================================================
*Interactive Brokers*
We keep our investments at this firm because if we ever need cash, we do not need to sell at the wrong time. We can borrow money from our account at dirt-cheap rates. Even now, with interest rates "high," the rate is about 4% to borrow funds. Use this link and get up to $1,000 of Interactive Brokers Stock. IBKR pays up to 4.33% interest on instantly available cash in your brokerage account (as of March 27, 2023)
https://ibkr.com/referral/larry410

*Quicken*
The easiest way to track your retirement finances as the software automatically download data from your financial institutions
https://quicken.sjv.io/c/3553828/913177/11856

*SeekingAlpha*
If you want to find great investment ideas with analysis from other investors as well as professionals, SeekingAlpha is a must-have subscription. We use this to identify great retirement investments with safe, high dividends.
https://www.sahg6dtr.com/BXCXC4/R74QP/

*Watch These Related Videos:*

👍 Why Congress Needs to Cut Your Social Security Benefits
https://youtu.be/Me0q_qjQ2yk

👍 3 Best Dividend Stocks for 2023
https://youtu.be/HIjaOmFzpjw

👍 Problems with the 4% Rule for Retirement - How to Make Retirement Savings Last
https://youtu.be/Ltb2GtDIGTA

👍 Three Best Dividend Stocks for 2023
https://youtu.be/HIjaOmFzpjw

👍 Easiest Ways to Generate Side Income in Retirement - Retirement Jobs
https://youtu.be/7J0pdgaYnNA

👍 Fix Your Retirement Finances - Use the Bucket Strategy
https://youtu.be/AVRItboxE7Y

👍 How to Recession Proof Your Investments
https://youtu.be/Qq1m16_Povw

👍 Retirees Spend Less When They Retire -- How to Retire With Less or Retire Early
https://youtu.be/2c-lDFZPtOQ

👍 Retirement Planning at 55 - Steps to take with 10 years to retirement
https://youtu.be/qLiThio8khA

👍 Retirement Age--at what age can you retire? How to figure it out
https://youtu.be/uU-6gJL1XfI

No video on our channel Retirement Crusaders is intended to be investment or retirement advice. These videos are for general educational purposes and not meant to advise you on your individual circumstances. Please consult a professional.

YouTube Video VVVvVTBidWh3VnBselhyc3lmMzQybk9nLmQ4LXBDdEVBazhF

The Threat of AI to Your Retirement Investments (and the US Economy)

Retirement Crusaders May 15, 2023 9:00 AM

*Join our Facebook group and interact with others who share similar concerns and questions about retirement https://www.facebook.com/groups/retirementcrusaders*
*Download our free booklets on 10 different retirement topics https://www.retirementcrusaders.com/retirementbooklets*