Filing your tax return by the deadline and making tax payments results in either a settled tax debt or, if there was an overpayment, can result in a tax refund. The transaction codes listed on your tax return provide information to the filer about the status of their tax return processing, including the reason for any delays and the decision of whether the taxpayer will receive a tax refund.
The 846 IRS code is a notation on your tax return indicating that the IRS has successfully finished processing your filed tax return and has approved the issue of a tax refund.
TABLE OF CONTENTS
- IRS Code 846 found on your tax transcript indicates that the IRS has approved the issue of a tax refund.
- The amount of the tax refund will be found on the line listed as IRS Code 846 with a date signifying when the refund was sent or initiated.
- Tax refunds are calculated based on the amount of taxes paid throughout the year compared to the final tax liability.
- Issues with tax refunds can be resolved by contacting the IRS over the phone, visiting your local IRS office, calling the Taxpayer Advocate Service, or consulting with a tax professional such as a tax attorney at Ideal Tax.
Facts and Statistics:
- IRS Code 846 is the code for Refund Issued.
- IRS Code 846 means that a tax refund was approved.
- The four divisions of the IRS, including Small Business and Self-Employed, Tax Exempt and Government Entities, Wage and Investment, and Large Business and International, were established by the Internal Revenue Service Restructuring and Reform Act in 1998.
- Tax refunds can be received through direct deposit or check.
How To Tell The Amount Of Your Tax Refund
The amount of the tax return issued by the IRS can be found on the line listed as IRS Code 846. There will also be a date next to this amount that signifies the date that the refund was sent or initiated by the IRS.
How Tax Refunds Are Calculated
Tax refunds are calculated based on the amount of taxes paid throughout the year. This amount is determined by the amount of income earned and the deductions and credit taken. The Internal Revenue Service (IRS) uses the information provided on the tax return to calculate the amount of taxes owed. If a person underpaid their tax liability throughout the year, they will owe money to the IRS when filing their taxes. Those who overpaid taxes throughout the year will be eligible to receive a refund.
When Will A Tax Refund Be Received?
Once the IRS code 846 appears on your tax transcript, your refund has been approved and you will be receiving the payment soon. If you request direct deposit refunds, the money should be processed within 2 to 3 weeks. If you request your refund through a paper check, you should receive it in the mail within 3 to 4 weeks.
Other Related Tax Codes
There are other tax code examples that taxpayers should be aware of when learning how to interpret tax transcripts and tax refunds.
IRS Code 898
You may see this transaction code on your account transcript if you have outstanding or delinquent non-IRS debt that part of your refund amount will be applied towards. Most commonly, the type of debt was from student loans, child support, or state income taxes.
IRS Code 899
If a portion of your tax refund was applied to non-IRS debt, you will see IRS code 899 listed on your transcript. While Code 898 will display the full amount of the refund that is applied towards outstanding debt, Code 899 displays the portion of the refund that is greater than the debt, and thus the amount that the taxpayer will receive as a refund.
IRS Code 826
IRS Code 826 is an example of a code that is present when a tax refund is applied toward an outstanding debt.
IRS Code 570
IRS Code 570 is a section of the Internal Revenue Code that indicates your tax returns are on hold for review and that you don’t need to do anything at this time until the hold is released.
IRS Code 841
If your direct deposit request is rejected by the financial institution, you will observe IRS Code 841 in your transcript. This rejection is due to a difference in the information listed on your tax return to the data at the financial institution.
What To Do If Your Tax Refund Is Incorrect
If you notice a discrepancy regarding your tax refund, there are many steps you can take to resolve this issue with the IRS.
Speak to an IRS agent on the phone
Calling the IRS phone line at 1-800-829-1040 is one of the most direct methods of resolving an inaccurate tax refund. However, the wait times can keep you in lines for an average of 3 hours. The agent may be able to help you over the phone, but in some cases, you may need to submit documentation to be reviewed.
Visit your local IRS office
Making an appointment to visit your local IRS agency can be a more efficient method of making changes to your tax transcript. It is beneficial to bring all the documentation and articles with you to be evaluated.
Consult with the Taxpayer Advocate Service
The Taxpayer Advocate Service is a department of the IRS that assists taxpayers in resolving tax issues.
Contact a tax professional
Tax professionals such as tax attorneys and licensed CPAs are another invaluable resource for people experiencing tax troubles. If you want personalized help through the tax resolution process, Ideal Tax can guide you and help you optimize your tax return. We specialize in helping taxpayers settle their tax liabilities with the IRS Fresh Start Program.
Tips To Optimize Tax Refunds
Everyone would prefer to see IRS Code 846 on their tax transcript, but there are a few actions people can take to increase their likelihood of receiving a tax refund upon filing.
Choose the optimal filing status for your tax situation
If you are married, you have the choice to file your taxes jointly or individually, which can change what you owe in taxes. While most 96% of couples choose to file their taxes together, this strategy will not always be the best option for their tax situation. Certain credits and deductions are only available for joint filers, but by learning about tax law and calculating your refund both ways, you can identify which method is suitable.
Utilize tax deductions
- Certain qualifying expenses can be deducted from a tax return to decrease the amount you have to pay in taxes.
Plan using a tax bracket calculator
Utilizing a tax bracket calculator can help you determine your estimated tax rate.
Shop during tax holidays
Shopping during a tax holiday is another way to cut down on what you owe in sales tax because, during these time periods, sales tax is tax-exempt.
If you are searching for further explanation about filing tax returns or information about how to optimize your tax refund, have all your questions answered by consulting with tax professionals at Ideal Tax today.