Today TaxMama® hears from TacoBrielle in the TaxQuips Forum, with a common misconception. “I can’t seem to get a definitive answer about this, so I’m asking here. I filed my federal return with a refund amount of $1,132. This refund went to the IRS for previous tax debt that was still owed to them. However, I had to amend my return because I received a late W-2 that I had forgotten. With the addition of this W-2, my refund was changed to $840. So I technically ‘owe’ $292 with the amended return. Since the IRS received the $1,132, do I still owe the IRS this money with my amended return?”
The reason I selected this question, from the many that have poured in this month, is – this does confuse people. So…
Of course you owe it!
Let me explain how this process works:
You RECEIVED the first refund, whether it feels like it or not. It was your money.
You (unwillingly) SPENT that refund to reduce your prior tax debt.
This IS the definitive answer. And no doubt, this is the answer you’ve been getting everywhere. It’s just not the answer you want.
And remember, you can find answers to all kinds of questions about the IRS grabbing refunds, and other tax and business issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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