Unexpected refund

[Robert4622]

I filed in March 2022, and today I got a very small refund check.  Notation ANDOVE.  I triple checked estimated tax payments, and I do not qualify for any of the common credits that were sent out in 2021, so this is a puzzle.  Bringing up the program today, no updates for Federal so it should have been up to date on filing.  I do get penalized, as my income is not steady, with a large amount in the fourth quarter, so the IRS doesn't like this.  I cannot make four equal payments as I never know what the fourth quarter will bring until that December.

[VolvoGirl]

Who was it from?  IRS Treasury Dept?   Is this in addition to your tax return refund or you had a tax due? If you had a penalty on 1040 line 38 they might have reduced it for you.

If you get a large income in December you can just make one estimated payment in the 4th quarter.

And if you get a penalty,  You might be able to eliminate it or at least reduce it.  You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you.  It's form 2210.

It's under

Federal or Personal (for Home & Business Desktop)

Other Tax Situations

Additional Tax Payments

Underpayment Penalties - Click the Start or update button

[Mike9241]

 did Turbotax show a different amount for the refund?  a small difference might be fr fees you told Turbotax to take out of your refund.  a large difference would likely indicate theiRS made change. Turbotax receives no inf about this.  your options 1) wait for a notice from the IRS - could take 3 weeks or longer from the date of your refund 2)  call the IRS 3) get a copy of your tax return transcript from the IRS website.  read what's needed to register for this and make sure you have those documents at hand when trying to register.

there are ways to avoid IRS penalties for underpayment of estimated tax.  either of these:

1) pay in 90% of current year tax (22.5% each quarter)  - not easy for many taxpayers because their income fluctuates widely

2) pay in 100% of your prior-year tax (25% each quarter) that increases to  110% (27.5% each quarter) if your prior-year adjusted gross income is  $150,000 or more

there may be a way to reduce your penalty if income fluctuates by using the annualized income installment method. this requires you to figure income and deductions for the first 3, then 5, then 8 months of the year. annualize these amounts compute the taxes on the annualized taxable income and then de-annualize the tax amount.  see form 2210. there is also a computation for the whole year which is the same as the taxes on the return for which you have to pay in 90%  

[Robert4622]

The small refund check came from the IRS, and was a tax refund for 2021.  I owed taxes.  I cannot make just one estimated payment in the 4th quarter since, depending on my mutual funds, fourth quarter could be a large % of my annual income or near my regular quarterly income.  Form 2210 is a nightmare and for the amount of the penalty, I cannot hire a CPA to do that.

Getting the check was simply a surprise, as that has never happened before using Turbo Tax.

I suppose I could call the IRS, but I don't have hours to wait on hold on the phone.

[VolvoGirl]

Did you read my post above?  And the IRS will mail you a letter saying why.  I bet they reduced the penalty on line 38.  I don't have problems doing 2210.  It's easier if you use the Desktop program.  And you can select to leave the penalty off and have the IRS figure it for you.  

And as for making a 4th qtr estimate, you can wait until you know the extra income amount.  The 4th qtr isn't due until Jan 15.

[Robert4622]

I have little faith for a letter from the IRS.  I was a victim of identity theft and the criminals immediately tried to access my taxes.  The IRS notified me they needed more time on an inquiry, so I informed them I didn't make the request, had filed the FTC identity theft form, use a PIN to file taxes, etc.  But despite that, every six months or so I get a letter from the IRS says they still need more time to process "my" request of over two years ago.  And while the IRS would know who tried to access my taxes, they will do nothing about it.  Apparently, they are incapable of reading my response letters.

I truly suspect the refund is a change in the penalty amount.  I have looked at the instructions for form 2210.  I do not have W-2 income and my income is quite variable and cannot be predicted in advance.  Even each quarter varies.  But since I got a refund for 2021 taxes, that may help in getting a waiver for 2022.  My 4th quarter payment was made in January, but even then I did not have all the precise information so I had a slightly larger amount due than expected.  Since brokerage firms are not required to send the 1099 until late February, it adds complications.

I do use the desktop program, Turbo Tax Deluxe.

[wbraden3]

I just got an unexpected refund, no letter yet, so I got my transcript and it is explained by the IRS reducing my underpayment penalty from what I submitted with TurboTax.

Now I don't know if I should go back and change my return?  I don't see the need, and I do see possible hazards.

ANDOVE just means your check was issued from the center at Andover MA.

I have read that one cause of unexpected checks is scammers who then pester you for the money, sometimes posing as IRS.  So it's a good idea to clarify what's going on.

[VolvoGirl]

No you don't need to amend or make your refund match the IRS.  It won't affect anything and doesn't transfer into next year.