Common Tax Refund Myths and Fake News

It’s tax season and social media is abuzz with tax related information. This includes news related to refund payments, which millions of Americans are anxiously waiting to get.

Unfortunately this also creates an environment of false information (fake news!), deceitful ideas, and outright scams around refund payments and getting them ASAP.

Here are some common red flags and false narratives to be aware of, particularly on social media.

My Tax Preparer or Software provider knows Where My Refund Is

Tax Preparers or software providers DO NOT control the official Where is My Refund (WMR) website or your IRS account where you can see transcript updates.

When you are checking WMR or the IRS2GO mobile app or your transcript, there is no point in seeing if your tax preparer or your filing software provider (like TurboTax or H&R Block) had additional information. They do not.

They see what you see! The people to call around your refund status are the IRS, despite the long wait you may encounter.

Surprised by The Debt Offset

If you owe a federal or state agency debt your refund money will likely automatically reduced by the IRS. They will send you a notice/letter within 2 to 3 weeks, via mail (not email or via a call) that states why your refund was taken.

If the debt was a non-IRS debt you would also have gotten a notice from the respective agency around the delinquent debt several times before it is referred to the IRS for collection via a refund offset.

While the IRS is legally required to offset your refund, it does not administer or know details around the non-IRS debt.

Calling them won’t help and instead you need to review the notice and call the BFS offset number. Under the TOP program you can appeal that debt, but not via the IRS.

IRS back taxes on the other hand are managed by the agency and details are in your account and likely several notices that were sent to you. These will also be offset against the refund unless you are preapproved for certain hardship programs.

If your refund is lower than expected, even after accounting for changes to tax laws and your own situation, you can contact a tax relief company that can represent you with the IRS or other federal agencies. They will either charge an upfront fee or take a portion of the refund they get back for you.

Why did <Insert Name> or <Insert Social Media Site> Show Refunds Were Paid

It does not matter if you and your friend filed on the same day, one person money can come before the other. Don’t try to play keeping up with jones’ when it comes to your tax return and refund processing.

There are also many people posting past year or fake payment claims, which is mean to downright being a scam.

All return and refund processing is done in IRS cycles/batches and every tax payer is different based on their filing and records with the IRS.

Check the official WMR, IRS2Go and your transcript to see what the IRS is doing with your return and when you will get paid.

That Tax Refund Advance Was Not Free

Once your refund payment is released, the advance loan you got on your refund, including any processing, preparation and filing fees will be deducted. Potentially eliminating your entire refund.

So please do not act like you don’t know and you are shocked your refund is lower than expected. The IRS only provides you the refund they sent you, they do not know about your refund advance loan or other fees.

That’s why your expected IRS refund amount is different to what hits your bank account or debit card. Don’t be shocked and you should have been told about this when getting your refund advance loan. Read the fine print.

Your Tax Preparation Fees Are Still Due

Per the points above If you owe any IRS or Non-IRS debt it will come out of your refund or result in a larger tax liability.

Regardless of the refund amount, if it was not enough to pay your tax preparer you will stil owe them the tax preparation fees.

That is, their fees and and processing costs (for advance loans) are not forgiven if your tax refund is too low or non-existent after any IRS adjustments.

Letters From The IRS

Many taxpayers will get IRS letters (also called notices) in the mail wanting them to prove identity and or letters stating the return is being reviewed. This is normal and has been going on for years.

The IRS sometimes randomly pick individuals as well and does not mean your tax preparer or filing software did anything wrong.

Just stay calm, review the letter and follow the instructions provided. You can call your accountant, preparer or audit support line (e.g. at TurboTax if you used them) to get additional help. Just don’t blame them.

History Does Not Always Repeat With Direct Deposits

Just because you got your deposit a few days early last year does not mean the same will happen this year. Calling TPG, Refund Advantage, Pathward, Chime, Cash App, BOA, Well Fargo, Chase etc will not make your refund come any faster.

I also see lots of people on social media (Facebook and Redditt in particular) asking about payment dates on their transcript processing date, transaction codes or something they see on their IRS account.

However per the earlier points, no-one other than the IRS, truly knows what’s going on with your tax return. Especially if its been less than 21 business days since you filed.

If they expect it to take longer than that, you will get the refund is delayed message.

Also if you do have a direct deposit date (DDD) on WMR or refund issued (code 846) please wait till that date has passed before you start to complain about not seeing your refund money in your bank account.

ID Verification is Random

The IRS additional ID verification is not really random. You don’t just get picked at random and there is an actual process the IRS follows to verify certain returns based on red flags, potential identity theft, past submissions and prior ID issues.

You should also consider signing up for an IRS Identity Protection PIN (IP PIN) to protect yourself and dependents from fraud during tax season.

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1 thought on “Common Tax Refund Myths and Fake News”

  1. I have a question regarding 1099ks and the NJ-1040.
    Where on the NJ-1040 for individuals can you deduct the expenses relating to a 1099k for a Gross Amount? I could not go on a couple of pre-paid vacations during 2022 so I sold them over the internet.
    I received a 1099k for the total amount I received. There is no place to offset this with the original coast like on the IRS Schedule 1 and Schedule C does not apply. I already checked the IRS instructions on this.
    I called the NJ Division of Taxation and the person there did not know either. I emailed the NJ website and have not heard a thing.
    Any ideas?


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