Level 2

Question

IRS refunds

Forum|Forum|5 years ago
March 12, 2021
24 replies
123 views

I have had several clients refund reduced before being direct deposited without any explanation from IRS.

Anyone else experiencing this?

ProSeries Basic

This topic has been closed for replies.

PATAX

Level 12

I cannot ever recall this happening... I believe if the amount is reduced it is because of an outstanding debt of some kind... Just my opinion

T

The-Tax-Lady

Level 8

Not yet. Does the IRS "Refund Status" website have an explanation for the offset, provided it's working.

A

artisgamAuthor

Level 2

WHERE IS MY REFUND HAS NO MENTION OR EXPLANATION

qbteachmt

Level 15

Here's the reason it would be reduced in reference to SE deferral. That's not a Creditable Refund; it's a deferral for something not yet paid, so it isn't also considered past due.

It's part of parity for the Self-employed to be treated as employers are treated for the Form 7200 provision.

"Employers that have already deposited all or any portion of the employer's share of Social Security tax during the payroll tax deferral period may not subsequently defer payment of the tax already deposited and generate an overpayment of tax"

"Employers that have already paid the employer's share of Social Security tax on wages during the payroll tax deferral period may not subsequently defer the payment of the tax"

Remember that SE = both an employer and an employee for purposes of the Social Security tax.

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rbynaker

Level 13

My first two guesses:

1) RRC recalculation

2) The filed returns had an amount in Schedule 3 box 12e but were claiming a refund.

T

The-Tax-Lady

Level 8

Your client will receive a letter from the Treasury Offset Program explaining why the refund was offset.

sjrcpa

Level 15

Or an explanation of why the return was changed. Direct deposit of refunds is much quicker than getting a letter in the mail these days.

The more I know the more I don’t know.

Just-Lisa-Now-

Intuit Community Champion

The deferred SE taxes have been tripping people up...if youre getting a refund, you cant defer the SE taxes, they reduce the refund instead.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

J

jc1628

Level 3

So far only one instance of this, a client with a new child born in the fall of 2020 had their refund decreased by exactly $500. I am anticipating them receiving a very late letter saying maybe they did not qualify for the first stimulus payment of $500 per dependent. This has not happened for any other clients with newborns in 2020 so maybe an outstanding obligation for $500 is just a coincidence. But all my research says that the child does not need to born prior to the CARES Act date to get the both stimulus payments.

qbteachmt

Level 15

This would not be an issue: "maybe they did not qualify for the first stimulus payment of $500 per dependent."

Because there is no Splitting of 2020. What matters is, on the 2020 form, the amounts you were entitled to or not (no splitting of 2020) against amounts paid in advance.

If the child qualifies and was born at any time in 2020, they are eligible for the $500 and the $600 as long as their other qualifications (filing status, income) are met. Just like anyone dying on Jan 1 or any date in 2020 is still considered eligible for the amount, as long as the other qualifications are met.

There is no splitting 2020. That tax return is the reconciliation of what they got, against both amounts that they qualify for. Not against each amount. You cannot qualify for only 1 of these, in 2020. Of course, you might have gotten only one of the amounts in advance.

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J

jc1628

Level 3

I completely agree. I just received a letter from the IRS that said the EITC & HOH supporting documents that a client submitted in Oct 2020 were received but misplaced by accident. They are so sorry but all documents will have to be resubmitted so now I longer know what to expect in IRS correspondence.

qbteachmt

Level 15

https://www.irs.gov/refunds/tax-season-refund-frequently-asked-questions

"Why is my refund different than the amount on the tax return I filed? (updated 2/5/2021)

All or part of your refund, including any amount for the Recovery Rebate Credit, may have been used (offset) to pay off past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or other federal nontax debts, such as student loans. To find out if you may have an offset or if you have questions about an offset, contact the agency to which you owe the debt.

We also may have changed your refund amount because we made changes to your tax return. This may include corrections to any incorrect Recovery Rebate Credit amount. You’ll get a notice explaining the changes. Where’s My Refund? will reflect the reasons for the refund offset when it relates to a change in your tax return.

Tax Topic 203, Refund Offsets for Unpaid Child Support, Certain Federal and State Debts, and Unemployment Compensation Debts has more information about refund offsets."

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I

iveteran23

Level 2

I'm having this problem also. Almost all of the refunds were reduced

dkh

Level 15

What did all the returns with reduced refunds have in common ? Recovery Rebate Credits, Deferred SE tax ??

J

Johnmars

Level 2

Yes, it happens. I had a similar situation. Sometimes, in order to return the overpaid taxes, you need to contact the tax company after a while. Usually after receiving the W2 form. You can come with your W2 form and prove that you have paid more taxes than you owe, then they will probably be reimbursed to you, but most likely they will be deducted from the amount of the following tax deductions. You will be able to estimate the amount of tax payments on the W2 form online at https://www.thepaystubs.com/w2-form-generator to find out how much money you can return. But this will not work if you live in a state where tax-exempt organizations must pay taxes on their own goods.

qbteachmt

Level 15

"Maybe you should contact the tax service?"

Start with the tax account transcript. That's why it is available. It is available through online access, so no mailing forms or faxing forms and no waiting period. No being on hold while someone gets to your phone call.

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