Surprise! 5 Reasons You Might Not Get Your Tax Refund

By Jacoba Urist on 16 February 2012 4 comments
Photo: Svenstorm

The one big upside to filing your tax return that everybody can agree on is getting money back from the government. How good does it feel to see that positive amount on the bottom of your return? For some families their refund goes right into that college savings account, to pay off their credit card, to take that long-awaited vacation, or simply to make ends meet in these tougher economic times. (See also: 8 Smart Things to Do Wity Your Tax Refund)

But did you know, every year, there are tens of millions of dollars the IRS won't be refunding taxpayers — even if they might be expecting that nice chunk of change this spring?

Before you count on the check from Uncle Sam (and work the expected boost into your household budget), make sure you don't fall into one of these categories...or the IRS might be holding onto your refund or giving it to someone else after all.

1. There are errors on your return

Every spring, people make the same, relatively straightforward mistakes on their tax returns that prevent the IRS from processing their refund on time. Common errors include: putting down the wrong filing status, an incorrect social security number, or missing information that's required for certain credits and deductions.

Advice for all filers — double and triple check your return before you mail or submit it, paying particular attention to anywhere you have to fill in names, numbers or addresses. Try to give yourself as much time as possible. Doing your return at 2 a.m. the day it's due doesn't leave you much room to catch any mistakes.

If you're preparing your own return, without the help of a tax professional, be careful that you've done your math correctly and you actually are due money back. Too often, I see people who run out and spend a phantom refund, only to have the rug ripped out from under them when they find out their calculations were off, and they really shouldn't be getting anything from the government this year.

Better safe than sorry. Don't spend your tax refund until you can either physically hold the check in your hand or see the amount in your bank account.

2. You owe back taxes

Nobody likes to hear this one, but the IRS is like the friend who holds a grudge for a long time and never lets go. If you owe federal or state taxes from previous years, the government can just yank the amount you're expecting back this year and apply it as an "overpayment" towards the taxes you haven't paid yet. And it's bye-bye refunds until the entire debt is gone.

3. You haven't paid child support

While it might take a little while for the right federal and state agencies to catch up with the problem, the government can place a levy on your tax refund to pay any outstanding child support you owe — even after your kid is 18 (and no additional support is legally due).

4. You defaulted on your student loans

Recent data has shown that people are defaulting on their student loans in record numbers. And with the job market the way it is, it's no surprise more and more students are having trouble keeping up with their payments after school.

Be aware — the IRS can (and does) turn your refund over to the Department of Education to pay down loans you've defaulted on. The agencies do "talk" to one another, and while it may not happen right away, chances are they will catch up with you.

5. They just can't find you

By the same token, hard as it may be to believe in the world of Facebook, Google Maps, and Twitter, the IRS is holding onto $153 million dollars right now in refunds it just can't seem to deliver.

Why? Because they have an incorrect mailing address for you, and can't locate your residence to mail you a check. And currently, the IRS won't try to contact taxpayers by email or phone, so you might have no idea that they're holding on to your money in the first place.

Best thing to do? Always choose to have your refund deposited directly into your bank account if you can (and triple check those numbers to make sure they're right!), especially if you know you're moving soon. Also, if you suspect you fall into this category, check in with the IRS on their website or call their hotline to make sure there aren't any old refunds lurking around out there that you deserve.

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Surprise! 5 Reasons You Might Not Get Your Tax Refund

Jacoba Urist is a tax and estate attorney from New York. She is a regular contributor to The Huffington Post and is writing a book "The Happiest Parent" about preparing the best possible future for every child. Follow her on Twitter at @TheHappiestPare.

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Will Chen's picture

"the IRS won't try to contact taxpayers by email or phone, so you might have no idea that they're holding on to your money in the first place."

Ah good old government. =)

Thanks for the great tips Jacoba.

Guest's picture

So many people are surprised when they don't get a full refund. This is one of the better explanations we've seen for the common reasons why. We included this post in today's best blogger tax tips roundup!


Guest's picture

Yeah, didn't get a refund this year. Instead, I owed the government. But that's how I like it . . . it's better that they don't keep my money interest-free. Of course, this is normally the case for the self employed, but for those who are employed by others, be sure to make adjustments to your tax documents so you don't go without a lot of money all year long (which could have been in your pocket, not the government's).

Guest's picture

What if I didn't file taxes last year