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Normally I don’t like talking about taxes mainly because I have a good friend that does it for me. Not to mention I don’t think I’m 100% qualified to talk about saving the most money on your taxes.¬†But sometimes, life throws you into a loop and while most of the time that can be negative, it can certainly be positive as well. In my case, I happened to have received a bit of an overpayment from the IRS this year. While we all like to enjoy some extra dough, letting the IRS give you money unexpectedly is something you shouldn’t take lightly.

I’ve seen the question asked, “what do I do if the IRS refunds me too much?” or “Should I keep the extra money that the IRS mistakenly gave me?”. Don’t worry,¬†as someone who has actually gone through this process, I’ll lay out the groundwork and provide you with a¬†step-by-step approach. Most other articles often talk about “what ifs” and other hypothetical that doesn’t really do much for someone who isn’t familiar with taxes or is scared of the IRS.

What You Should Do If The IRS Refunds You Too Much (AKA: Erroneous Refund)

Step 1: Double Check Your Refund Status and Follow the Directions On Your IRS Letter

I’m willing to bet that a majority of you probably have gotten a direct deposit over a refund check. So if you are like me and notice something like this on your bank statement:

IRS Refund Overpayment

Nothing like getting paid nearly $24K+ more than expected.

First of all, yes, I couldn’t believe it. Obviously, this was too good to be true, maybe it was an error. Anyways, chances are if you get¬†a different refund amount, expect to receive¬†a letter from the IRS over the next several days.¬†

You can also check your refund status here: https://sa.www4.irs.gov/irfof/lang/en/irfofgetstatus.jsp

  • You will need to insert your social security number
  • Filing Status
  • Your refund amount

You should have a copy of your refund either with your accountant, tax software, or filed if you did it yourself. Once you put in your info you’ll see a page like this.

Refund Overpayment

You want to double check because you want to make sure that it was the IRS that made a payment and that you will also get additional directions on how to follow up. In my case, I was kind of hoping they added a random decimal point or maybe I botched my taxes and they were right.

Step 2: Call The IRS Immediately!

If you look online on your refund status page, you’ll also get a reference number and a phone number to call.¬†Don’t wait to call that number. You will need to call that number as soon as possible and speak to an IRS Representative so they can document this mistake. I’ll include the numbers from the refund page and from the IRS website in case you have trouble.

  • IRS Refund Number:¬†1-800-829-0582, when asked for an extension, enter 332.
  • IRS Standard #:¬†800-829-1040 (individual) or 800-829-4933 (business)

When you speak to the IRS, be sure to use the reference number from the website or from the letter you received. Simply explain that you got more money from what you expected on your refund.

The call can last about an hour as they will look to see if there were any mistakes or miscalculations. Either way, their goal is to help you and they will figure it out.

Note: Just because your IRS agent works for the government, doesn’t mean they know 100% of what’s going on. So be sure to follow up on how to make a payment and what to address it to.

Once you are done speaking to them, it will be likely that you will either need to refund the full amount or just the amount of overpayment. In my case, it was a $22,000 over-payment :(.

Step 3: Return Your Money ASAP

While a majority of you might have taken a direct deposit over a check, I’ll go over both methods of returning your money.

If You Haven’t Cashed The Check

  1. Write “Void” in the endorsement section on the back of the check.
  2. Submit the check immediately, but no later than 21 days, to the appropriate IRS location listed below. The location is based on the city (possibly abbreviated) on the bottom text line in front of the words TAX REFUND on your refund check.
  3. Don’t staple, bend, or paper clip the check.
  4. Include a note stating “Return of erroneous refund check because (and give a brief explanation of the reason for returning the refund check).”

If You Already Cashed The Check or Received A Direct Deposit

  1. Submit a personal check, money order, etc., immediately, but no later than 21 days, to the appropriate IRS location listed below. The location is based on the city (possibly abbreviated) on the bottom text line in front of the words TAX REFUND on your refund check (if you cashed the check).
  2. Write on the check/money order: Payment of Erroneous Refund, the tax period for which the refund was issued, and your taxpayer identification number (social security number, employer identification number, or individual taxpayer identification number).
  3. Include a brief explanation of the reason for returning the refund (it can be handwritten or typed)

You have 21 Days to Send Your Check Before You Are Charged Interest

You do have longer than 21 days, but after 21 days you are likely to be charged interest on the extra money refunded. To my best recollection, interest is fairly small so if you are a couple days late, you might have to pay an additional $5 or $10.

Does it suck that you have to pay money to the IRS on their mistake? Yes, but that’s a reality.

Step 4: Track Your Mail + IRS Correct Addresses

I’ll be blunt, the IRS doesn’t have the best website and there is a lot of confusing information. My hope is that my content can bring clarity. But on top of that, I want to make sure you pay back the IRS promptly and correctly.

Who To Make the Check Out To

When you write the check to the IRS, make it out to either 1) “U.S. Treasury” or 2) “United States Treasury”. I know it might be overkill with the hand holding, but I want to cover all bases.

Use USPS Certified Mail

Don’t put your check in an envelope and stamp it, you run the risk of your check not getting to the IRS coughthathappenedtomecough.¬† Go to the post office, ask them to mail it certified and they will verify the address for you as well. It might cost $3 but you’ll be able to track your mail and know when it arrives.

IRS Tax Refund Addresses

I DON’T TRUST THE IRS WEBSITE ADDRESSES as there are errors. Here you are going to get the¬†actual correct mailing addresses¬†of all the IRS locations that will accept your refund check.

ANDOVER
Internal Revenue Service
310 Lowell Street
Andover MA 01810

ATLANTA
Internal Revenue Service
4800 Buford Highway NE
Chamblee GA 30341

AUSTIN
Internal Revenue Service
3651 S IH 35 Frontage Rd
Austin TX 78741

PHILA
Internal Revenue Service
2970 Market St.
Philadelphia PA 19104

BRKHAVN
Internal Revenue Service
5000 Corporate Ct.
Holtsville NY 11742

CNCNATI
Internal Revenue Service
201 West Rivercenter Blvd.
Covington KY 41011

FRESNO
Internal Revenue Service
5045 East Butler Avenue
Fresno CA 93727

KANS CY
Internal Revenue Service
333 W. Pershing Road
Kansas City MO 64108-4302

MEMPHIS
Internal Revenue Service
5333 Getwell Road
Memphis TN 38118

OGDEN
Internal Revenue Service
1973 Rulon White Blvd.
Ogden UT 84201

Step 5: Follow Up After 10 Days

Normally, it will take about 3 business days for your check to reach an IRS office and another 2-3 business days for them to cash it. So more or less it will be a little over a week for payment to be made. If it’s been 10 days, call the IRS from the phone numbers above.

From what I’ve been told, it appears that the IRS gets a notification when something is mailed to them as it’s being delivered. So when you inquire about your check, they should have knowledge of its whereabouts.

What Not To Do If The IRS Overpays Your Refund

Don’t Spend It!

This should be obvious, but Uncle Sam isn’t going to randomly gift you extra money. As awesome as it is to think you hit it big or that you caught a break, it’s not for real. Any additional money that they give you is technically a¬†loan¬†and you’ll be charged interest if you aren’t prompt. The last thing you want is the IRS to be on your heels.

Remember, The IRS doesn’t give out Freebies

Yes, it’s a followup from my previous point, but I really mean it when I say, “You will have to owe the government if you don’t pay up, they will realize it was a mistake”. Again, the extra money is essentially a loan.

Don’t Ignore It

Some of you are probably thinking, “well, if I don’t say anything or spend anything, I can wait it out”. Bad idea. It’s better to be proactive and call the IRS to confirm it is a mistake. Yes, it does suck saying goodbye to extra money, but that’s not really your money.

What If The IRS Says It’s Correct?

Now, this is where we get to a dark/grey area. You did the right thing by calling the IRS and they verified that their adjustment was correct. On paper, it sounds like you are in the clear. I think 80% of the time, you should be. It is very possible that the IRS did catch a mistake and it gives you more than your expected refund.

But we are all human and people can make mistakes. So even if they say it is correct, I would put the money in a CD or a high-yield savings account and gather interest on it for a few years in case the IRS changes their mind. That way you’ll at least get more interest than what you have to pay the IRS.

Related

IRS Tax Refund Guide