IRS Refund confusion, anyone venture a guess?

[MJ]

Little over 2 weeks ago, I electronically submitted my IRS 2020 tax return. Today, IRS electronically deposited my refund but it is less than the overpaid amount I reported.
On 5/17, using EFTPS, I made a extension payment of $223 but don't understand why their system deducted that amount from my overpaid refund. I tried several times calling the IRS but their message says they are very busy. I wondering if they are now very busy with return extension issues.

 

[all4j]

My 1st guess is that perhaps you used the wrong year when making the extension payment...otherwise, it might be helpful to know why you made the payment when expecting a larger refund. That might trigger some other ideas

 

[PaunchyPirate]

Little over 2 weeks ago, I electronically submitted my IRS 2020 tax return. Today, IRS electronically deposited my refund but it is less than the overpaid amount I reported.
On 5/17, using EFTPS, I made a extension payment of $223 but don't understand why their system deducted that amount from my overpaid refund. I tried several times calling the IRS but their message says they are very busy. I wondering if they are now very busy with return extension issues.

I don't think the delay is specific to return extension issues. Many, many people who filed normally back in March/April are still waiting on their refunds. My mother filed (by paper because the IRS erroneously rejected her electronic filing) on February 24. About 2 months ago, the IRS sent her a letter saying they had processed her return but were giving her $1200 more than she was expecting due to an error in our filed return. We still don't know where they got that $1200 from. But they said expect refund payment in 4-6 weeks. That was 8 weeks ago.

Do a Google search. Millions are waiting on the IRS right now for one thing or another. They are horribly understaffed, underfunded, yada, yada, yada.

Have you created an online account with the IRS? If you haven't, you should. From that account, you can see a transcript of your Account and a transcript of a specific year's return. Request both and inspect them. They usually have more details on what happened. When those transcripts say "By Computer" it means the IRS computer calculation came up with that number.

The other thing to check is that you properly made the EFTPS payment. Did you credit it to the right year? Did you credit it to the 1040 Estimated Payment form? Or perhaps there is a different form to link it to for an extension payment? I'm not really sure what that type of payment means.

 

[MJ]

My 1st guess is that perhaps you used the wrong year when making the extension payment...otherwise, it might be helpful to know why you made the payment when expecting a larger refund. That might trigger some other ideas

Good guess but no, it was for 2020. I was waiting for the IRS to respond to an inquiry so that is why I made the extension and paid the additional tax based on the worse tax scenario but never got a timely reply.

 

[SecondCor521]

The IRS is impossibly busy.

I'm waiting on the rest of my 2020 refund. I filed electronically on March 21, corrected an error they notified me about on June 17, and received about half of my refund on October 13.

I've tried calling numerous times. I've tried making an appointment. No dice.

At this point, from the tea leaves I can see I think I'm waiting on a letter from them, and I think they need me to prove that my daughter is actually my daughter. Even though she's almost 20, and I've been claiming her as my dependent with the same name and SSN for about, oh, 20 years.

They're busy with:

1. 2020 tax changes from the American Rescue Plan Act passed in March 2021. The law changed the taxability of the first ~$10K of unemployment income, and eliminated the payback penalty for ACA subsidies.

2. They may still be doing work related to the stimulus payments. There were provisions in the law to make catch up payments to people who were newly eligible based on their 2020 tax return for EIP3.

3. They're busy implementing the advance-able child tax credit payments. This, by the way, is going to be a complete mess for tax preparers next spring. I've seen several complaints from parents about payments that are missing, wrong amounts, and differing amounts.

4. They're probably still catching up from the coronavirus impact, where they had to work from home (harder and slower to do). I've read that lots of taxpayer mail is just sitting in warehouses waiting to be processed. It's supposedly FIFO, which is at least something.

And it has not happened yet, but if the current social spending / climate bill passes, the IRS will be even more buried with the additional complex tax changes. Although there is funding in the bill for the IRS to increase enforcement, it's unclear whether there is any funding to handle the tax changes themselves.

 

[MJ]

I don't think the delay is specific to return extension issues.

As I wrote in my post, I electronically transmitted my 2020 return about 2 1/2 weeks ago and was rather surprised that I got my refund deposited into my bank account sooo quickly but minus the extension amount I made thru EFTPS which BTW was identified as an extension tax type for 2020 so I believe I crossed all the T's and dotted the I's.

 

[PaunchyPirate]

As I wrote in my post, I electronically transmitted my 2020 return about 2 1/2 weeks ago and was rather surprised that I got my refund deposited into my bank account sooo quickly but minus the extension amount I made thru EFTPS which BTW was identified as an extension tax type for 2020 so I believe I crossed all the T's and dotted the I's.

About 3 weeks ago, There was a thread here or on Bogleheads.com where someone had made their estimated payments using EFTPS. The IRS said they didn’t get them. The person was able to provide the EFTPS confirmation numbers to the IRS. But the IRS was insisting they had no way to find the payments. They weren’t the EFTPS department, essentially. They were trying to insist the person needed to go to their bank and get the bank to provide the transaction details on bank letterhead. The bank said they won’t do that. Even though it was EFTPS pulling the money there was apparently no way to prove to the IRS that they actually have it somewhere. Such a mess.

I hope your resolution is simpler. I have used EFTPS in the past and had no problems.

Good luck.

 

[molly312]

I was notified on Sept. 20 that I would receive a refund based on expenses closing an aunt's estate in 2019. The letter said I would "". receive the check in 2-3 weeks and ...if not - let us know. I called the given phone number to let them know I hadn't received the check, pushed the buttons for every possible selection. Every time I called, I connected with a recording that said they were too busy to answer the phone and to try again later that day or the next day.

They apparently/understaffed and still too busy to answer the phone. Not sure if my check is sitting in somebody else's mailbox, been stolen, or has not yet been mailed. Very frustrating.

 

[MC Rider]

I always owe money due to self employment.
So, no problem with refunds here.


I hope you get your money that is due you sooner than later.

 

[frank]

I usually keep my refund to a minimum and then credit it to the next years taxes. no need to worry about the refund that way. one time I sent them a paper check for estimated payment and they did not deduct it from my taxes owed. I called them and they said they had the check and cashed it but didn't know what the money was for, even though I sent the estimated tax voucher with the check.

 

[MJ]

Since I do quarterly estimates, I normally only pay the IRS the same amount I owed the previous year because like many of you, I hope, my income generally increases from the past year. In 2020, my wife had a situation and I was not sure how much tax I would owe until a tax issue was resolved so I extended my return and paid the max tax due 5/17/21 that I might owe under one of the two scenarios hence when I finally submitted my return in October I had a refund coming.