CPA and TurboTax tax expert Lisa Greene-Lewis joins TheStreet to review some of the reasons why your tax refund might not match your expectation.
Tax Year 2022
There are common reasons people see lower refunds than expected every tax season. For tax year 2022 tax filers who were eligible for expanded tax benefits under the American Rescue for tax year 2021 like Child Tax Credit, the Child and Dependent Care Credit, and the Earned Income Tax Credit may see lower refunds this year since tax benefits under the American Rescue Plan are either reverting to Pre-American Rescue Plan tax rules or going away.
Tax Year 2021 Video Transcript:
[MUSIC PLAYING] TRACY BYRNES: So you calculate your tax return. You think you're getting all this money back, and then lo and behold. You don't what the heck is going on? Lisa Greene-Lewis, CPA and Turbotax expert is here with us to explain why is my refund different than I expected, Lisa?
LISA GREENE-LEWIS: Yeah, there's some standard reasons why people's refunds could be adjusted, but this year especially with the advance child tax credit payment, millions of people receive those advances in 2021. And if you don't report the correct amount that you received from the IRS starting back in July of last year, you will see an adjustment on your return, as well as your refund. The IRS did issue a new letter. It's letter 6419.
TRACY BYRNES: All right, but we're getting all these letters from the IRS. Do they come in the mail? Do I have to go online to find them? How do I know where they are?
LISA GREENE-LEWIS: Yes, so the new IRS letter 6419, it did come in the mail. You should have received it by January. So I would make sure that you had that letter in front of you when you do your taxes, or if you have someone do your taxes. You want to enter the correct amount that you received. That's on that letter.
TRACY BYRNES: OK, so go check your tax file. The incorrect reporting of the third stimulus also caused some problems, didn't it?
LISA GREENE-LEWIS: Right, the IRS also issued a new letter that they sent out that you should have had by January as well, and that's letter 6475, and that will report the correct amount of the third stimulus you received. So you want to enter that you did receive that, so that you're reporting the correct amount you received. Or let's say you didn't receive it all and you want to claim the recovery rebate credit, then you want to have the correct reporting so there's no delays in your return and no adjustment of your refund.
TRACY BYRNES: Right, because the IRS has these letters as a reminder, right? So the IRS knows the right numbers. You need to input the correct ones. That's the reason for the differential in your refund amount. The advance child tax credit, which we will talk about in another video, also caused a ton of problems.
LISA GREENE-LEWIS: Something that's common right now, the IRS they did update their refund FAQ's and they put a notification at the top, and it says that if you're seeing an adjustment in your refund, that it could be because of the advanced child tax credit payment, or the third stimulus.
TRACY BYRNES: And there's also other obvious reasons that your refund is different, right? You tried to take a credit you didn't deserve, you left out some income that was already reported to the IRS. But there's also like bigger things, like back child support and overdue taxes. How does that all play in?
LISA GREENE-LEWIS: Right, so those would be a treasury offset. So if you had that child support, or you owe a state tax liability, those-- they would offset your federal refund with those amounts. And you would get a letter regarding the treasury offset as well as any of these other adjustments, you'll get an adjustment letter from the IRS.
TRACY BYRNES: And just, I'm sure people know they could check the IRS's Where's My Refund site, but also you could use Turbotax too to help out, right?
LISA GREENE-LEWIS: Right. Turbotax, we guide you through the advanced child tax credit, as well as the third stimulus. And we identify and have you look out for that letter. We specifically call out the IRS letter 6419 and letter 6475 so that you don't miss inputting the numbers from those letters.
TRACY BYRNES: Right, because the less mistakes the better, the quicker you get your money back. Lisa Greene-Lewis, thank you so much for taking the time.
LISA GREENE-LEWIS: Thank you for having me. [MUSIC PLAYING]
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