Question

The tax refund I received is less than expected. Why is it less than what was on my return?

Answer

Don’t worry — we’ll help you figure out why the refund from your tax return is less than expected.  

There are lots of reasons why this might happen. In most cases, the IRS takes part of your refund to pay for outstanding government debts you might owe. 

These include:

  • Overdue federal tax debts
  • Past-due child support
  • Federal agency nontax debts
  • State income tax debt
  • Unemployment compensation debts owed to a state (for fraudulent wages paid or contributions due to a state fund)
  • Student direct loan and guaranteed loan repayments
  • Small Business Administration (SBA) loan repayments
  • Department of Housing and Urban Development (HUD) loan repayments

The IRS handles outstanding debts for federal taxes. The Department of Treasury’s Bureau of Fiscal Services (BFS) handles all other outstanding debts. If they take refund money to pay a debt, you’ll get a notice from the BFS with information about why the refund from your tax return is less than expected. The notice will show all of these:

  • Original refund amount
  • Your offset amount (the amount of your refund money they take)
  • The agency receiving the payment
  • Address and phone number of the agency

Unexpected Smaller Tax Refund: What If I Don’t Receive a Notice?

If you don’t get a notice, you can call BFS at 800-304-3107 or 866-297-0517 (TDD for people who are deaf).

Contact the agency if you think you don’t owe the debt or you disagree with the amount taken from your refund. Contact the IRS only if your original tax refund unexpectedly differs from the amount on your return.

Related Topics

Related Resources

Form 1041 Schedule D

Do you need to report capital gains or losses associated with an estate? Learn more about Form 1041 Schedule D with help from the tax pros at H&R Block.

IRS Letter 671C – Response to Inquiry

Receive an IRS 671C letter? Learn more about letter 671C, why you received it, and how to handle it with help from the tax experts at H&R Block.

Identity Theft Indicator

Learn what the IRS identity theft indicator means. Read the IRS definition and get more insight from the experts at H&R Block.

How Long Does It Take? IRS Audit

How long you can expect your IRS audit to last depends on the type of audit and the scope. Learn how to efficiently wrap up an audit from the tax experts at H&R Block.