What To Do If Your Tax Refund Is Wrong

In 2024, the IRS issued nearly 105 million refunds to taxpayers with an average refund of more than $3,100. If you’re among the millions of American taxpayers who are expecting a tax refund this year, or any year, it’s worth double-checking that the amount of your refund matches what was shown on your tax return.

In most cases, refund amounts are just what filers expect. But occasionally, a tax refund is wrong. In some cases, it’s less than what was figured on the Form 1040. Every now and then, it’s more.

Whether the refund discrepancy goes against you or favors you, there are some steps you can take to resolve the matter.

An IRS explanation is on the way

First, don’t panic. There’s usually a logical explanation for why you and the IRS came up with different numbers for your tax refund.

The IRS will send you a written notice explaining the adjustment to your refund and why it’s different from the amount you expected to receive. The only problem is that the explanation doesn’t always accompany the refund — that’s especially true if you receive your refund via direct deposit.

The letter from the IRS serves as confirmation that the amount of your refund has been adjusted, and it’s important to make sure that you agree with the reasoning for the changes, says Damien Martin, a certified public accountant who is based in the Chicago area.

“Whenever you get a notice from the IRS or a state department of revenue, you always want to make sure you keep this information for your records and understand why it was sent,” Martin says.

Why your refund might be an unexpected amount

There are a number of reasons why your refund may not match the amount you expected, Martin says, so it’s important to review why you and the IRS came up with different numbers.

Adjustments are usually due to mistakes that you or your tax preparer made when filing your return, but there are other possible explanations too. Some common reasons for changes in tax refund amounts are:

• Math errors when computing your tax bill.
• Claiming an incorrect credit or deduction amount.
• Crediting estimated tax payments incorrectly.
• Outstanding debt, such as a student loan, is being collected.

Since the letter and tax refund (via check or direct deposit) usually don’t arrive simultaneously, you can always call the IRS if you get a refund check and have questions about the amount.

The main IRS toll-free number is (800) 829-1040 or (800) 829-4059 (TDD) for the hearing impaired. You also can call or visit your local Taxpayer Assistance Center. The IRS website has an interactive locator page to help you find the nearest one.

According to experienced tax pros, the best time to call is about an hour before the IRS office is scheduled to close. Mornings usually are very busy, and during tax-filing season, you’ll probably be in for a long wait on hold at any time of the day.

What to do with the money while you wait

More than 90 percent of taxpayers received their refund via direct deposit in 2024, which means you likely won’t notice that your refund amount doesn’t match what you expected until the money hits your account.

What should you do during that period between receiving your refund and a letter from the IRS explaining the discrepancy in the refund amount? According to the IRS, you should take action to return an erroneous refund whether you received it by check or direct deposit, because interest may accrue on the overpaid amount. However, many people may decide to wait until they’ve received the explanation letter to clear up the refund issue.

If your refund is for an amount less than you expected and it turns out you were correct, once you and the IRS resolve the matter in your favor, the agency will make up the difference (plus a bit of interest if it takes more than 45 days to correct the error) and send you another check for the balance due.

If the amount of your refund is more than you believe you should have received, you should hold off on cashing the check or spending the money until the issue is resolved.

Once again, that notice explaining the adjustment will be very helpful in determining what to do with the refund you’ve received. You may be able to get this information more quickly by creating an online account with the IRS, where you can access a wide variety of information including digital copies of certain notices the IRS sends.

Registering for an online account is a good way to check what information the IRS shows for your return. “First, let’s figure out or understand what the IRS is seeing or thinking,” Martin says.

Documentation of the difference

Once you get the official word on why your refund is not what you expected, it’s time to figure out what happened.

A typical IRS notice will show you some basic Form 1040 information: adjusted gross income, taxable income and total tax due. In each of these categories, the IRS will indicate what you entered vs. what the agency came up with. A major difference in one of these areas will pretty clearly show you where the problem lies.

The document should also note how much tax you paid and any over- or underpayment. Additional charges or credits, such as interest and penalties, also are taken into account.

Receiving this type of notice can be nerve-wracking, particularly if the adjustment to your refund doesn’t leave you with extra money — that’s why it’s so important to understand why the IRS came up with a different refund amount than you did.

If you agree with the IRS’s assessment of your refund amount and you’ve already received the refund, then there’s most likely nothing else to do, Martin says. “You’re probably in good shape.”

If you worked with a tax professional to file your return, then you should alert that person before taking action or cashing the refund check, Martin advises. “Always mention the tax notices you get.”

If you don’t agree with the IRS’s assessment of your refund amount, then you need to understand the reasoning for the adjustment. You can respond to the IRS, explaining why you believe your calculation of the refund is correct and offer supporting information and documentation, Martin says.

The notice should also include a phone number and you can contact the IRS directly for help. If you want to dispute the refund, you can file Form 843 if you still believe that your refund amount is incorrect.

Common refund discrepancy causes

Some sort of mathematical error is typically the reason for refund discrepancies, in which case the IRS will simply correct your calculations and send you the proper refund amount. If your refund is less than expected, it’s generally because a penalty was assessed, Martin notes.

Other reasons for a discrepancy include:

• You claimed a tax credit or other tax perk that you’re not entitled to receive.
• The IRS made an error. Estimated tax payments are a common culprit for different refund amounts. It’s possible that one or more estimated tax payments weren’t credited properly, or that the amount of tax on the return is calculated correctly but the discrepancy in the refund is because you and the IRS don’t agree on the amount of tax paid. In either case, providing documentation of prior estimated tax payments will help to reconcile this issue.
• Other numbers that cause problems are those nine Social Security digits. When any of those are wrong (such as transposed numbers, or they don’t match other records, perhaps involving name changes after marriage or adoption), problems with your tax return — and tax refund — can occur.
• Refund issues also crop up when there are name discrepancies, such as when the names of dependents don’t match Social Security numbers or if husbands and wives have different names, as do their children.
• Your tax refund also can be a way for federal or state governments to collect money you owe. The most common cases involve delinquent child support or alimony payments, or unpaid student loans. Also, the IRS will make sure it gets any unpaid tax debts. Even taxpayers who have a payment arrangement in place with the IRS could encounter refund issues. IRS payment plans generally say the IRS can apply tax refunds to what you owe.

Correcting your mistakes

In a worst-case scenario, you might not even get a refund but instead receive notice that you need to refile your tax return.

You also should refile your return if you find a mistake that the IRS overlooked in processing. If the IRS does eventually notice the error, you’ll face penalties and interest on the amount you didn’t properly pay on time.

In these cases, file an amended return with Form 1040-X and explain on the form why you are amending your return. You should send the original, incorrect refund check back to the agency and write “void” on the back of the check where you would normally endorse it and include a note explaining why you are submitting a “return of erroneous refund check.” See this IRS page for instructions.

If the refund money was sent via direct deposit, you need to contact your financial institution to have the money returned to the IRS. In this case, you will need to contact the IRS by phone at (800) 829-1040 to explain why the direct deposit is being returned.

When corresponding with the IRS about a refund discrepancy, be sure to include your name, Social Security number, mailing address and a daytime phone number in case an agent needs to follow up with you.

Other considerations for an erroneous refund

• Keep track of the documentation you exchange with the IRS about the refund error for your records, Martin advises.
• If you applied some or all of your tax refund to the following year’s taxes and there’s an adjustment to your refund amount, that can create a multi-year issue that you need to stay on top of, Martin says. That’s because one erroneous refund often impacts multiple years worth of tax returns. “You can end up with a pen pal relationship with the IRS,” Martin says.
• While it’s no fun to return a tax refund — or receive less money than you expected — by correcting the discrepancy as quickly as possible, you minimize the amount of interest you may be required to pay the IRS. And you may also reduce the chances that you will unexpectedly hear from the IRS in the future.