IRS screws up refund / I Bond purchase

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Topic Author
RubyTuesday
Posts: 2236
Joined: Fri Oct 19, 2012 11:24 am

IRS screws up refund / I Bond purchase

Post by RubyTuesday »

Anyone had something like this happen and/or have suggestions for correcting?

For purposes of illustration, $ amounts are simplified.

We had $2000 withheld during 2020.
We owed $1000 in fed taxes.
We made additional payment of $4040 through fed system online ach so that we could get $5k I bonds and $40 refund.
Filed Fed, accepted, waiting for refund.

Checked bank account and there’s $1000 refund from IRS.

IRS site still says return being processed.
Checked tax and account transcript and it shows all my correct filing info, my additional payment, my $5040 refund due, my form 8888 entries ($40 direct deposit and $5k bond purchase).

Everything LOOKS right except that they issued a refund of $1000 instead of following my form 8888 instructions.

Somehow, the IRS jumped the gun and refunded the difference in my withholdings and tax due without taking into account form 8888 and the additional payment.

I suspect that I will get balance in I bonds, but less than $5k.

Anyone else experience similar? Can IRS be forced to correct and send my I bonds?
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
BrokerageZelda
Posts: 463
Joined: Sat Apr 10, 2021 10:39 am

Re: IRS screws up refund / I Bond purchase

Post by BrokerageZelda »

Is it possible that you could have gotten one of the relief bill "plus-up" payments totally separately from your regular tax refund?

https://www.usatoday.com/story/money/20 ... 223565002/
Topic Author
RubyTuesday
Posts: 2236
Joined: Fri Oct 19, 2012 11:24 am

Re: IRS screws up refund / I Bond purchase

Post by RubyTuesday »

BrokerageZelda wrote: Wed Apr 21, 2021 4:31 pm Is it possible that you could have gotten one of the relief bill "plus-up" payments totally separately from your regular tax refund?

https://www.usatoday.com/story/money/20 ... 223565002/
Good thought, but no.

All relief payments are accounted for. I simplified the example, but the refund amount that was direct deposited was the exact difference between our withholdings and the tax due (something unusual like $1190).
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
livelovelaugh00
Posts: 241
Joined: Sun Dec 25, 2016 7:15 pm

Re: IRS screws up refund / I Bond purchase

Post by livelovelaugh00 »

I pre-paid tax last December just to get the refund in i bond too. Filed tax and the firm through h & r in person in mid March. I haven't received the I bond yet. I plang to call h & r and irs.
Topic Author
RubyTuesday
Posts: 2236
Joined: Fri Oct 19, 2012 11:24 am

Re: IRS screws up refund / I Bond purchase

Post by RubyTuesday »

livelovelaugh00 wrote: Wed Apr 21, 2021 9:05 pm I pre-paid tax last December just to get the refund in i bond too. Filed tax and the firm through h & r in person in mid March. I haven't received the I bond yet. I plang to call h & r and irs.
I paid the extra using direct pay at IRS scheduled on April 1. After confirming it was pulled from bank, I filed return electronic through H&R Block later same day. I suspect paying the estimate and filing return same day may have been problematic, :oops:

But everything in my IRS transcript seems correct except the amount they refunded.
:confused
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
whomever
Posts: 1198
Joined: Sat Apr 21, 2012 5:21 pm

Re: IRS screws up refund / I Bond purchase

Post by whomever »

FWIW, we're batting .500 on the paper Ibond thing - one time we got the bonds, the next time they just ignored the form and sent us a $5K refund. I went back and looked the 8888 or whatever it is form over with a magnifying glass and didn't see any errors. I just gave up on the idea.

It seems to work for enough people I should try again.
Topic Author
RubyTuesday
Posts: 2236
Joined: Fri Oct 19, 2012 11:24 am

Re: IRS screws up refund / I Bond purchase

Post by RubyTuesday »

whomever wrote: Thu Apr 22, 2021 8:08 am FWIW, we're batting .500 on the paper Ibond thing - one time we got the bonds, the next time they just ignored the form and sent us a $5K refund. I went back and looked the 8888 or whatever it is form over with a magnifying glass and didn't see any errors. I just gave up on the idea.

It seems to work for enough people I should try again.
In the past the only issue I had was when my CPA filed my return and miscalculated the penalty for under payment and I received no bonds. IIRC, every other year it has been fine.
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
Topic Author
RubyTuesday
Posts: 2236
Joined: Fri Oct 19, 2012 11:24 am

Re: IRS screws up refund / I Bond purchase

Post by RubyTuesday »

Interestingly, my account transcript includes items with dates in the future.

Like return Processing Date is April 26, 2021.
There are also entries for:
Notice Issued 4/26/2021
Additional account action pending 4/26/2021 .....$0.00
Resolved additional account action 5/3/2021 .....$0.00
Additional account action pending 5/3/2021 .....$0.00
Resolved additional account action 5/6/2021 .....$0.00

Strange that there are account entries post-dated.
:confused
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
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