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

The Difference Between 1099 and W-2 Forms

Do you know the difference between W-2 and 1099 forms? Learn more from the tax experts at H&R Block.

IRS Letter 3500 – Interim Letter

Did you receive IRS Letter 3500? Learn more about letter 3500 and how to handle it with help from the tax experts at H&R Block.

IRS Letter 2269C – Delinquent Tax Return/Insufficient Response

Learn more about letter 2269C, why you received it, and how to handle an IRS 2269C letter with help from the tax experts at H&R Block.

IRS Letter 5043 – Notification of Possible Income Underreporting

Learn more about IRS Letter 5043 and how to handle an inquiry of your business' income with help from the tax experts at H&R Block.