What to Do if You Get a Reduced Refund

All About Tax Return

If you have received a reduced refund from the Internal Revenue Service (IRS), chances are you are confused about why this happened in the first place. Generally, if you receive a reduced refund, the IRS itself or a Financial Management Service (FMS) is behind the move. The refund is generally received to cover overdue child support, unpaid federal agency non-tax bills, unpaid state income taxes, or unpaid state unemployment compensation debts. In case any organization filed a claim against your debt, an FMS will deduct the necessary amount from your refund to settle the claim. You will receive the balance (if any) by cheque or direct deposit. Within two weeks of the issuance of a check or direct deposit, the IRS typically sends a letter. The amount of the offset and the amount you’ll receive after the offset are both specified in the letter. If you think your refund has been wrongfully reduced, you can reach out to the IRS with the assistance of an IRS tax attorney. If you reside in Dallas, experienced IRS tax attorneys are readily available in Fort Worth, TX. However, before you do that, it helps to know some basic information about a reduced refund.

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Reasons for reduced refund

Here are the most common reasons why the IRS may issue a reduced refund in your bank account:

  • Past-due child support;
  • Federal agency non-tax debts;
  • State income tax obligations; or
  • You owe certain unemployment compensation to the state. These may include:
    1. Compensation paid due to fraud
    2. Contributions owing to a state fund that wasn’t paid

How to request your refund shortfall from the IRS

In normal circumstances, the BFS (Bureau of the Fiscal Service) will notify you if an offset happens. The notice will include the initial refund amount, your offset amount, the receiving agency’s name, contact information, and address. Once the due date for your refund has passed, the BFS will inform the IRS of the amount deducted from your refund. If you disagree with the amount deducted from your return, or think you don’t owe the bill, get in touch with the agency listed on the notice. Only if your original refund amount on the BFS offset notice differs from your tax return’s refund amount should you contact the IRS. It always helps to seek tax help from a registered IRS tax lawyer. When looking for tax attorney help, make sure that you only hire one with a plethora of experience in the field. With so many tax attorneys in Fort Worth, TX, always go with one that has a proven track record.

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Injured Spouse Claim

You have the right to request the IRS for your share of the refund if you filed a joint return and are not liable for your spouse’s debt. You should submit Form 8379, Injured Spouse Allocation, to claim the refund. Any of the following methods may be used to submit Form 8379:

  • With your original joint tax return (Form 1040 or Form 1040-SR),
  • With your amended joint tax return (Form 1040-X), or
  • By itself, after you receive notification of an offset.

It can take 11 weeks for an electronically filed return or 14 weeks for a paper-filed return to be processed if you submit Form 8379 together with your original return. On the other hand, processing will take around 8 weeks if you submit Form 8379 after a joint return has already been processed.

Final Word

Receiving a reduced refund can be confusing for any taxpayer. If you are facing such a situation, it’s recommended that you hire a qualified IRS tax attorney. When looking for an experienced Fort Worth tax lawyer, look no further than the Law Offices of Nick Nemeth. Your search for a “tax lawyer near me” ends here. Our team of reputable Fort Worth tax attorneys is here to assist with a range of IRS tax problems. To learn more about how a tax lawyer in Dallas, TX, can help resolve your tax problems, call (972) 426-2553, or fill out our Contact Form, and we’ll take it from there.