Don't Mess With Taxes

This post was updated Feb. 13, 2018.

After starting a bit late, the 2018 filing season is well underway. That means that millions of filers have already sent the Internal Revenue Service their tax returns, mostly because they're expecting a refund.

The total number of refunds issued so far in 2018 is a bit smaller than those issued early in last year's filing season. Of course, this year's filing season opened a week later than it did in 2017.

The overall average tax refund amount, however, is a bit bigger this year. Early filers got an average of $2,035 this year. That's 2.1 percent greater than the average refund taxpayers got at this point in 2017.

And if you had your refund directly deposited to a bank account, which almost 6 million filers have done so far this year, then your refund amount was even bigger: $2,084.

Why refunds are wrong: One thing, however, remains the same year after year. Some taxpayers are surprised when their refund check arrives.

Sometimes, the surprise is a good one. Your refund check is more than what you entered on your 1040.

Other times, though, the difference in the refund that shows up on the check or was directly deposited in your account is less.

There are several reasons why your refund amount might be different than what you expected.

• Math errors were made in computing your tax bill.
• Incorrect credit or deduction claims were made.
• Estimated tax payments were not credited properly.
• Other federal debts, such as a student loan, are collected.

Math and other numerical mistakes: Those math errors are the most common mistakes folks made on their returns. So if your refund amount is not what you expected, pull out your copy of your return and double check your entries and math.

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 refund — appear.

Refund issues also crop up when names of dependents don't match Social Security numbers. Husbands and wives have different names, as do their children.

And estimated tax payments are a common culprit in divergent refund amounts. The amount of tax on the return is calculated correctly, but the filer and IRS come up with a difference on the amount of tax paid.

Other debts collected from refunds: Your tax refund also might be a direct path to other money you owe.

The government can go through your federal refund to collect if you owe money to other government agencies.

The most common cases involve court-ordered financial payments associated with a former marriage (e.g., delinquent child or spousal support payments) or unpaid student loans.

And, of course, the IRS will even make sure it gets prior federal tax debts that you didn't clear.

Even taxpayers who have a payment arrangement in place with the IRS could encounter refund issues. The agreement with the IRS says it can apply any refund you have against what you owe.

Explanation forthcoming: Whatever the reason, the IRS should let you know. So be on the lookout for an explanation from the IRS as to why there's a difference in your calculated refund amount.

The big problem here is that the notice typically comes separately from the check or direct deposit, so you have to wait.

If you don't want to wait for the written explanation, you can always call the IRS with questions about your refund amount. The main IRS toll-free number is (800) 829-1040 or (800) 829-4059 (TDD) for the hearing impaired. Note though that at this time of year, you could be on hold for a while.

A better help option might be a call or visit to your local Taxpayer Assistance Center.

What to do with a wrong refund: If you discover that the IRS is correct and your refund is not what you expected, your initial reaction — OK, your second reaction after "Yeeeessss!" or "WTF" — is "What should I do?"

If the amount is less than you expected, it's usually OK to go ahead and cash the check or spend the direct deposit.

If you disagree with the IRS rationale for the reduction and can show that you deserved the larger expected amount, the agency will make up the difference. It will come in a separate refund, so you can spend or save the one you already have in hand.

If, however, the IRS' math was right, then you've got all you're getting.

When a tax refund is larger than you expected — yes, it happens; that was the case in an unexpected $4,000+ refund the hubby and I got one filing season because of an error on my part — you might want to hold off spending the money until you get a satisfactory explanation.

That way if the IRS was too generous and you do happen to have to pay some or all of it back, then you've got that cash in hand.

The IRS' has a special online page detailing the steps you must take to return an erroneous refund. It covers what to do if the wrong refund was directly deposited or snail mailed as a paper check and how to handle the situation when you've spent the wrong refund amount.

Whatever the reason, if the refund was wrong, take care of the matter as soon as possible, since you could, by law, end up owing interest on any mistaken tax payment overage you received.

You also might find these items of interest:

• The many ways a refund can go astray
• S.C. woman uses federal tax refund to pay year's rent
• Savings bonds' tax advantages and as a refund option