You submitted your taxes on time and were fortunate enough to receive a tax refund. But what if the amount deposited in your account by the IRS is less than the refund you expected when you filed your tax return? You could be wondering why your tax refund is smaller than you anticipated.
There are several reasons why IRS refunds may be different than expected this tax season:
The IRS changed the recovery rebate credit calculated on your tax return.
The IRS changed the amount of the child tax credit calculated on your return.
The IRS made adjustments as a result of discrepancies in what was reported to them or changes to specific credits and deductions.
As part of the Treasury Offset Program, your refund is reduced.
An adjustment for unpaid federal taxes from a prior year
The IRS has recently updated their Tax Season Refund FAQs, which explain:
If your refund amount differs from what you expected, it could be due to modifications we made to your tax return, such as corrections to any Recovery Rebate Credit or Child Tax Credit amounts. In addition, your return may have been utilised (offset) to pay down past-due taxes or debts. Check the FAQs below and see Where Is My Refund? for further information
Continue reading for more information to help you understand why your return may be less than expected, but keep in mind that you don't need to remember all of this come tax time. Cheap accountants in London professionals are accessible year round in English and Spanish for answers to this query and anything else relating to your tax situation, and can even review, sign, and submit your tax return. Also, the IRS has provided information on why your refund may have been changed.
The IRS has changed the Child Tax Credit on your return.
It is conceivable that your return will be smaller than what you expected if you provided incorrect information for your advanced child tax credit instalments. The IRS provided you Letter 6419, which included the total amount of 2021 advance payments you received as well as the number of qualified children utilised to calculate those payments. If you did not enter an amount or entered an amount that differed from what the IRS has on file for you for advance Child Tax Credit payments, your refund amount may be adjusted, causing delays.
Note that married filers should each receive their own IRS letter 6419. It is critical that the information from both letters be incorporated together on your tax return to avoid an adjustment and delays.
The IRS has made changes to the Recovery Rebate Credit calculated on your return.
Because of information about your stimulus funds and the Recovery Rebate Credit, your tax refund may be less than you anticipated.
Did you apply for a credit to make up for late or partial third-stimulus payments?
Many Americans who did not receive the third stimulus payment, or the full amount they were otherwise entitled for, may be eligible to claim a Recovery Rebate Credit when they file their taxes for the 2021 tax year (the taxes you generally file in 2022).
Cheap accountants in London has proactive assistance about Economic Impact Payments, popularly known as stimulus checks, when preparing your tax return, and will ask you if you received a full or partial payment, as well as the amount you received.
If you responded that you did not receive the third stimulus check, a recovery rebate credit is calculated, which increases your refund; however, if the IRS did send it to you, the IRS will alter your refund amount proportionately. This reduces the refund amount computed for you when your tax return was filed.
It's also possible that you recorded a different amount of stimulus than the IRS really sent you while completing your taxes, and the IRS adjusted it. The IRS will cross-reference the information on your tax return with the information they have on file for you while processing your tax return. If the information on your stimulus checks does not match the information on IRS records, the IRS will automatically change your tax refund amount based on the actual stimulus funds given out and the information provided on Letter 6475.
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