Oops, The IRS doubled my tax return...what to do?

[jpjr]

We have had plenty of issues with tax returns over the last few years because our ID had been stolen..through the IRS. For two years I actually filed manually, and this year I filed electronically. The IRS questions the authenticity of my e-filed return, asked for some additional info and then said, ok we'll process your return in six weeks. I was perturbed by the additional time as I had filed back in February. Today the direct deposit from the IRS arrived and it was twice what my HP online return calculated. No small sum for us, it is now more than 10K. What to do is my question.

 

[eta2020]

What about simple phone call to IRS. I would not count on this as a free money .

"The mills of the gods grind slow, but they grind exceeding fine"

 

[sheehs1]

I had this happen with the return for my Mom's trust one year. They returned the entire tax which was 4 1/2 times the amount you are talking about. I knew it was a mistake and a data entry error. I called them, wrote a letter and returned it.

If you think they are wrong, don't deposit it!

 

[FUEGO]

I had an unexpected tax refund this year too. My first year needing to file estimated taxes, so I filled out the 1040 (paper form) requesting the IRS to keep the $640 tax refund. I received a check for that amount a few weeks ago and thought "crap, now what?" since I already missed the 1st quarterly tax payment.

I'll only owe $1100-1200 on federal so I figure any underpayment penalties will be minuscule and I might just stick a note in with my 1040 saying, in effect "IRS, you F'd up, pls don't assess an underpayment penalty".

In other IRS mistakes this year, they took the $640.00 on one of my 1099-MISCs and ignored the decimal place. They wanted $2X,000 additional tax and penalties since they thought my income was $63,360 higher than I actually reported (many deductions/credits were phased out due to higher AGI per their calculations). Still waiting on the official later saying "okay, we accept your explanation and agree you owe nothing". This identical error happened 10 years ago and the dollar amount was almost exactly the same too ($638.00 read as $63800).

 

[Sue J]

Not the same problem as OP but another IRS issue.....

We got a letter from the IRS last week because HealthCare.gov has not yet sent them our 1095-A forms. There was a hang up this year, HC.gov said we didn't have insurance when we really, really did have it and got a subsidy all year.

Our issue was resolved in March, I filed in April but we didn't get our official forms until May 13th. I mailed back with a copy of our 1095-A forms, our 8962 and a cover letter explaining the issue. This should clear it up.

So another 6-8 weeks for our refund. Some of it is normal tax overpayment but most of it is additional Premium Tax Credit for our Obamacare. We fully funded an HSA which dropped our MAGI so they say we get additional PTC subsidy.

 

[MissMolly]

I had an unexpected tax refund this year too. My first year needing to file estimated taxes, so I filled out the 1040 (paper form) requesting the IRS to keep the $640 tax refund. I received a check for that amount a few weeks ago and thought "crap, now what?" since I already missed the 1st quarterly tax payment.

I'll only owe $1100-1200 on federal so I figure any underpayment penalties will be minuscule and I might just stick a note in with my 1040 saying, in effect "IRS, you F'd up, pls don't assess an underpayment penalty".

In other IRS mistakes this year, they took the $640.00 on one of my 1099-MISCs and ignored the decimal place. They wanted $2X,000 additional tax and penalties since they thought my income was $63,360 higher than I actually reported (many deductions/credits were phased out due to higher AGI per their calculations). Still waiting on the official later saying "okay, we accept your explanation and agree you owe nothing". This identical error happened 10 years ago and the dollar amount was almost exactly the same too ($638.00 read as $63800).

The same thing happened to me this year. Received a letter from the IRS with a bill for $11,000+ stating I had understated my income in 2014. I had a 1099 for some consulting work for $620. They dropped the decimal and counted it as $62,000. Sent them a letter with a copy of the 1099. Received a response saying (paraphrased) "We received your letter. Haven't had the time to review, but feel free to go ahead and forward the $11,000+." Ummmm... I don't think so.

 

[Texas Proud]

My first question is did you have it direct deposited into your account?

If so, then there is no issue about depositing it or not.... it already is...


Like other have said, call the IRS and talk to someone... you will get the run around, but hopefully you will finally get someone who knows what to do...


Remember, they can come and get that money (IIRC) forever.... as others have said, it is not a windfall... I would guess they might take a year or two to know they made a mistake on their own as they usually do not look at current returns... only the computer matching forms.... and since you do not have any form missing (I assume) then you did nothing wrong...


But, and this is a wild guess, did you get a W-2 that had withholding? Maybe they screwed up and sent it in twice... I would think that would make you owe more taxes, but it might be where they are getting more paid than you put down....


Which I guess leads me to another question... was it exactly double?

 

[cathy63]

Here's what the IRS says to do:

https://www.irs.gov/taxtopics/tc161.html

If your refund was a direct deposit:

1. Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received and have them return the refund to the Internal Revenue Service.
2. Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) to explain why the direct deposit is being returned.

 

[FUEGO]

The same thing happened to me this year. Received a letter from the IRS with a bill for $11,000+ stating I had understated my income in 2014. I had a 1099 for some consulting work for $620. They dropped the decimal and counted it as $62,000. Sent them a letter with a copy of the 1099. Received a response saying (paraphrased) "We received your letter. Haven't had the time to review, but feel free to go ahead and forward the $11,000+." Ummmm... I don't think so.

Those IRS guys. Funny folks.

We got the "We received your letter. Haven't had the time to review yet but we will let you know when we do". Not too worried because we are 100% in the right, but it would be good to get that final "case closed" letter.

 

[jpjr]

I just received a letter from the IRS explaining why my return was much higher than expected. They say I had under-reported the taxes that had been withheld by the tune of $6,000. They go on to say that if I disagree, I should give them a call. Guess I'll be spending several hours on hold when I call Tuesday.

 

[mickeyd]

What to do is my question.

Wow, that's a toughie. Did you check your math? Could IRS be correct and you be incorrect?

I know that I would hate it if I sent the IRS a refund check and later found out that I was incorrect.

Have fun on Tuesday...

 

[bmcgonig]

I just received a letter from the IRS explaining why my return was much higher than expected. They say I had under-reported the taxes that had been withheld by the tune of $6,000. They go on to say that if I disagree, I should give them a call. Guess I'll be spending several hours on hold when I call Tuesday.

Lord, if they want to argue with you, let them win.

"Do you want to be right, or do you want to be happy" might apply here


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[jpjr]

I look forward to seeing what 1099 they may have that I could have missed. Ours is a pretty simple return. To be updated on Tuesday!

 

[cathy63]

I just received a letter from the IRS explaining why my return was much higher than expected. They say I had under-reported the taxes that had been withheld by the tune of $6,000. They go on to say that if I disagree, I should give them a call. Guess I'll be spending several hours on hold when I call Tuesday.

Did they include the line-by-line details of the adjustments they made? If they did, there should be enough info to figure out where they got the withholding amount and if you possibly missed including a number from one or more 1099s or W2s or if they double counted one.

Something similar happened to us last year for TY13, and the letter that accompanied the bill was very clear about which numbers on which line of the 1040 they thought were wrong and which institutions had reported those numbers. The IRS was right about one discrepancy that worked in our favor, and wrong about one that would have worked against us, so I ended up doing a 1040X and a letter and sending in copies of the W-2 and 1098-T they questioned and we wound up with a $2.5K refund instead of a $5K bill.

If you do accept any changes they make on your federal return, be aware that they communicate that info to your state as well, so you might want to file an amended state return.

 

[Sunset]

I just received a letter from the IRS explaining why my return was much higher than expected. They say I had under-reported the taxes that had been withheld by the tune of $6,000. They go on to say that if I disagree, I should give them a call. Guess I'll be spending several hours on hold when I call Tuesday.

Weird, as this suggests you did make a mistake, how come I never get this kind of tax help

 

[MissMolly]

Update. We received a letter today from our friends at the IRS letting us know the situation with our 2014 taxes is resolved and we owe $0.00.


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