Are You Receiving a Smaller Tax Refund

Could There be Unforeseen Instances in Getting a Smaller Tax Refund?

Reach out to one of our dedicated Tax Professionals at PriorTax should you believe the debt is not owed or there is a discrepancy in the amount taken from your refund. A Free dedicated Tax Professional could sort out the difference between your return and the original tax refund when you received a smaller tax refund.

The tax refund I received is less than expected. Why am I getting a smaller tax refund?

Are you concerned about the amount of your smaller tax return refund? We’ll assist you in understanding why the refund from your taxes is less than anticipated.

It is pretty normal for this to occur, often resulting from the IRS utilizing a portion of your refund money to cover any outstanding government debts that are owed.

In many cases, the IRS will use a portion of an individual’s tax refund to cover any unpaid government debts. These could range from overdue federal tax payments to student loan repayments and more. Other examples include past-due child support, outstanding state income taxes, fraudulent unemployment compensation wages or contributions due to a state fund, and SBA loan repayments.

HUD (Department of Housing and Urban Development ) loan repayments
Managing unpaid taxes comes under IRS jurisdiction, while any other debts are handled by the Department of Treasury’s Bureau of Fiscal Services (BFS). You may receive a notice from BFS detailing why your tax refund is less than what you expected should part or all of it be used to settle a debt.

When part or all of your anticipated tax refund is allocated to pay off a debt, BFS will provide notification to clarify the details. This notice will explain the initial refund amount, offset amount (the portion they are taking), and details of the agency that is receiving payment such as its address and phone number.

But, Did You Get More in Tax Refund instead of less?

You May Have Overpaid Withholding Taxes

Believe it or not, getting money back from the IRS is only sometimes good. That may seem odd, but it’s true. Receiving a refund can have implications that may ultimately cost you more in the end.

Nobody likes giving Uncle Sam a loan without collecting interest, yet this may be the situation you are in with your payroll taxes. Too much is likely being withheld, meaning you could be getting more of your money back. To ensure you’re not missing out, it’s wise to double-check your withholding amounts. That way, you can use the funds how and when you want to – rather than doing a last-minute scramble when tax season comes around.

One way to review your withholding taxes is with an IRS Tax Estimator. You’ll need to have pay stubs and any other paperwork related to income on hand. Once you put in all that information, it can tell you what your tax liability looks like.

Once you obtain results from this estimator, it’s possible to decide whether or not filing a new W-4 form should be submitted to your employer.

One way to guarantee success at tax time is to look into withholding. Doing this makes it possible to ensure the proper amount of taxes are taken out and avoid any unpleasant surprises when filing. Additionally, this can help you decide whether you should change the amount of taxes deducted from each paycheck.

Instead of allowing Uncle Sam to loan you money, make sure your withholding is accurate by periodically checking it. Waiting until the end of the year can lead to over-withholding and an unnecessary loan from the government.

This entry was posted on Thursday, August 17th, 2023 at 8:00 am and is filed under Tax and Life Changes, Tax Tips and Tricks, Taxes for Prior Years. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.