Tax return changed and IRS notification

[oldphd]

Hi everyone,

I filed my taxes electronically with Turbotax in mid Feb. When I got my refund (not as fast as some here were saying, but only a week longer than most), it was slightly smaller than expected ($154), which works out to $700 in income in my 22% marginal bracket. My situation is reasonably simple, SS, pensions, 1099 for IRA withdrawal/Roth conversions, standard deduction, most assets are in tax deferred/free accounts. Just some interest on cash flow. I have gone back over my taxes and for the life of me can't figure out what I did wrong! My first thought was I must have input an incorrect number (manually entered all my data from1099s, etc.), but I can't find anything.

About 20-25 years ago I had something similar happen where the IRS made a change to my return. On that occasion, I figured out where I had erred fairly quickly, and the IRS sent me a letter within a couple of weeks explaining the change. Well, I'm coming up on 3 months since I filed, and haven't received any IRS explanation. I expected to hear something by now...am I being unrealistic on the timing?

Not a big $$ amount, but I'd like to know. Particularly in the event that I need to consider something different for next year. Last few years I've been tracking my income manually and planning tax return by determining Roth conversion amounts. My spreadsheet estimate has hit my final numbers within a dollar or two the past several years. My concern is if I'm missing something I don't want to make an error that is bigger $$ and puts me into IRMAA. My plan is to do the same thing I've done for the past few years, convert up to first IRMAA tier this year and next before cutting back to 12/15% bracket as I get my tax deferred account down to a manageable level and other passive income (another pension and 2nd SS) come online over next few years.

Anyone have any recent experience along these lines regarding how long it takes to hear back?

Thanks fro any feedback...

oldphd

 

[PaunchyPirate]

You can create an account on IRS.gov (if you don't have one already), and then use the menus to generate and view a Tax Return Transcript (and optionally, an Account Transcript). These documents will, in great detail, articulate the data used to process your return. It shows your submitted values and what the IRS values are. The IRS values are referred to as "Per Computer" or something similar to that. The 2 types of transcripts are very similar and share some overlap of contents. But I like to generate both of them every year for my own records. I first found them useful when trying to figure out what the IRS was doing with my Mother's tax returns a few years ago.

 

[SecondCor521]

I also think you should have received a letter by now, but that's out of your control.

You can also go to IRS.gov, log in to your account, then download copies of your tax transcripts. You should be able to figure out at least which number(s) the IRS changed by looking at the transcripts. From there it should be pretty quick to figure out what happened.

I wouldn't be looking for a missing $700 from a 1099. I think the most likely error is a typo in the hundreds digit of a larger number - like putting $12,252 instead of $12,952.

 

[cathy63]

The letter may have been lost in the mail. If you have an irs.gov account, then click on Notices and Letters and see if there's any info there. That may save you the time and effort of combing through transcripts.

If you do need to read the transcripts, then addition to SecondCor521's advice on looking at the hundreds digits of the numbers you entered, I'd also look for a missing doc that the IRS has but you don't. Maybe someone issued a 1099-MISC for $700 that you didn't receive. There could also be a form on a consolidated 1099 from a brokerage that you didn't notice, or even an extra number on a 1099-DIV or -INT that you missed. It's even possible that someone made a typo on a 1099 and issued it under your SSN instead of the person's who should have received it.

 

[oldphd]

Thanks for your replies! Here's an update...

I wasn't aware of the tax transcript, and didn't have an IRS account. Had login.gov and make estimated payments, but not ID.me and IRS. Took a little time to get that set up, my lighting wasn't great and took a few tries.

Got in, and found the account transcript.

Good news! I did my taxes 100% correct!

Bad news... I had a penalty for a "dishonored payment". Turns out the IRS charges a 2% penalty on the estimate amount (in my case, $7,700), which was the $154. In 2023 I switched from making payments from my wife's account to mine (cash flow/availability). Turns out, I set it up on the first payment, but when I went to make the second payment, I used the original PIN, not the new PIN, which is what associated it with the bank ACH info. I missed it when I made the EFTPS payment, incorrectly thinking I had changed the account info in my EFTPS, when what I did was add a second option, and it bounced since she didn't have that much money in the account. Since I did it early enough I still had time to correct and use the proper PIN without incurring any interest penalty.

Given that it was a penalty, there was no letter online, I guess they don't send one for that.

Long story short, mystery solved. Many thanks to those who pointed me in the right direction, learned something new today. Wish I'd asked sooner, been scratching my head about this for awhile!