News & Updates

Once people complete and file their tax return, many of them eagerly await any refund they may be owed. No matter how a taxpayer plans to use their tax refund, knowing fact from fiction can help manage expectations as they wait for their money. This tip dispels some federal tax refund myths that many people believe are fact, but they are pure fiction.

Myth: Calling the IRS, a tax software provider or a tax professional will provide a more accurate refund date

Many people think talking to the IRS or to their tax software provider or tax professional is the best way to find out when they will get their refund. The best way to check the status of a refund is through the Where's My Refund? tool or the IRS2Go app.

Taxpayers can also call the automated refund hotline at 800-829-1954 to get their refund status. This hotline has the same information as Where's My Refund? There is no need to call the IRS unless "Where's My Refund?" says to do so.

Myth: Where's My Refund? must be wrong because there's no deposit date yet

Updates to Where's My Refund" ‎and to the IRS2Go mobile app are made once a day, usually overnight. Even though the IRS issues most refunds within 21 days, it's possible a refund may take longer. If the IRS needs more information to process a tax return, the agency will contact the taxpayer by mail. Taxpayers should also consider the time it takes for the banks to post the refund to the taxpayer's account. People waiting for a refund in the mail should plan for extra time.

Myth: Where's My Refund? must be wrong because the refund amount is less than expected

There are several factors that could cause a tax refund to be less than expected. The IRS will mail the taxpayer a letter of explanation if it makes adjustments. Some taxpayers may also receive a letter from the Department of Treasury's Bureau of the Fiscal Service if their refund was reduced to offset certain financial obligations. Before calling, taxpayers should check the Where's My Refund? tool or wait for the letter to understand why the change occurred. This can help taxpayers know how to respond.

Myth: Getting a refund this year means there's no need to adjust withholding for tax year 2023

To avoid a surprise next year, taxpayers should make changes now. One way to do this is to adjust their tax withholding with their employer. The Tax Withholding Estimator tool can help taxpayers determine if their employer is withholding the right amount.

Taxpayers who experience a life event such as marriage, divorce, or the birth or adoption of a child, or are no longer able to claim a person as a dependent, are encouraged to check their withholding. Taxpayers can use the results from the Tax Withholding Estimator to complete a new Form W-4, Employee's Withholding Certificate, and submit it to their employer as soon as possible. Withholding takes place throughout the year, so it's better to take this step as soon as possible.

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Form 1099-K, Payment Card and Third Party Network Transactions, is an IRS form that is used to report certain payment transactions.

If taxpayers receive a Form 1099-K, they should use that information with their other tax records to determine their correct tax liability. Taxpayers must report all their income on their tax return unless it's excluded by law, regardless of whether they receive a Form 1099-K.

Taxpayers will receive Form 1099-K for business transactions, including income from:

• A business the taxpayer owns.
• Self-employment.
• Activities in the gig economy.
• The sale of personal items and assets.

Money received as a gift or for reimbursement does not require a 1099-K. Taxpayers can minimize the chance of an error by asking friends or family members to correctly designate that type of payment as a non-business-related transaction. The taxpayer should also make a note of what the payment was for and who sent it. Good recordkeeping is key.

What to do when a Form 1099-K is incorrect

Some taxpayers may have received a Form 1099-K for the sale of personal items, or Form 1099-K may have been issued in error – such as for transactions between friends and family, or expense sharing.

If the information is incorrect on the Form 1099-K, taxpayers should contact the issuer immediately. The issuing organization's name appears in the upper left corner on the form. Taxpayers should keep a copy of all correspondence with the issuer for their records.

If a taxpayer receives a Form 1099-K in error and the taxpayer cannot obtain a corrected Form 1099-K, the taxpayers should follow the IRS' updated guidance at Understanding Your Form 1099-K.

1099-K reporting threshold for tax year 2023

The American Rescue Plan of 2021 changed the reporting threshold requirement for payment apps, also known as third-party settlement organizations. The IRS announced that the new Form 1099-K reporting threshold will start in tax year 2023.

• The old threshold was $20,000 and 200 transactions per year. This applies to tax year 2022 and prior years.
• The new threshold is more than $600. This applies to tax year 2023 and future years.

The threshold change means some people may receive a Form 1099-K who have not received one in the past. There are no changes to what counts as income or how tax is calculated.

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Taxpayers who can't pay their tax bill by the April 18, 2023, deadline shouldn't panic. The IRS offers several options to help them meet their obligations.

It's important for taxpayers to file their tax return or request an extension of time to file at IRS.gov/extension by the April 18, 2023, deadline – even if they can't pay their full tax bill. Doing so will help them avoid a failure-to-file penalty.

This extension applies only to the filing deadline, not the payment deadline. Except for eligible victims of recent natural disasters who have until Oct. 16 to make various tax payments, taxpayers who can't pay the full amount of taxes they owe by April 18 should file and pay what they can. Making a payment, even a partial payment, will help limit penalty and interest charges.

For taxpayers who cannot pay in full

Taxpayers struggling to meet their tax obligation may consider these payment options.

Online payment plans

Taxpayers who owe but cannot pay in full by April 18 don't have to wait for a tax bill to set up a payment plan. They can apply for a payment plan at IRS.gov/paymentplan. These plans can be either short- or long-term.

• Short-term payment plan – The payment period is 180 days or less, and the total amount owed is less than $100,000 in combined tax, penalties and interest.
• Long-term payment plan – The payment period is longer than 180 days, paid in monthly payments, and the amount owed is less than $50,000 in combined tax, penalties and interest.

Offers in compromise

An offer in compromise lets taxpayers settle their tax debt for less than the full amount they owe. It may be an option if they can't pay their full tax liability or doing so creates a financial hardship. The IRS considers a taxpayer's unique set of facts and circumstances when deciding whether to accept an offer.

Taxpayers can see if they're eligible and prepare a preliminary proposal with the Offer in Compromise Pre-Qualifier Tool.

The IRS offers penalty relief to eligible taxpayers

Taxpayers may qualify for penalty relief if they tried to comply with tax laws but were unable due to circumstances beyond their control.

Here's what taxpayers should know about possible penalties and interest

Taxpayers who owe tax and don't file on time, may be charged a failure-to-file penalty. This penalty is usually five percent of the tax owed for each month or part of a month that the tax return is late, up to 25 percent. The failure-to-pay penalty applies if a taxpayer doesn't pay the taxes, they report on their tax return by the due date.

Interest is based on the amount of tax owed and for each day it's not paid in full. The interest is compounded daily, so it is assessed on the previous day's balance plus the interest. Interest rates are determined every three months and can vary based on type of tax; for example, individual or business tax liabilities. More information is available on the interest page of IRS.gov.

An extension of time to file is not an extension of time to pay. An extension only gives taxpayers until Oct. 16, 2023, to file their 2022 tax return, but taxes owed are still due April 18, 2023.

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With the 2023 tax filing season in full swing, taxpayers should be sure to visit IRS.gov for updated resources and tools to help with their 2022 tax return.

Things to know before filing

• Taxpayers should wait to file until they receive all their proper tax documents, or they risk making a mistake that could cause delays.
• They should also review their income documents carefully. If any of the information is inaccurate or missing, taxpayers should contact the payer right away for a correction or to ensure the issuer has their current mailing or email address.
• Creating an IRS Online Account can help taxpayers securely access information about their federal tax account, including payments, tax records and more.
• Organized tax records make preparing a complete and accurate tax return easier and may help taxpayers find overlooked deductions or credits.
• Taxpayers with an Individual Taxpayer Identification Number or ITIN may need to renew it if it's expired and is needed on a U.S. federal tax return. If they don't renew an expiring or expired ITIN, the IRS can still accept their return, but it may delay processing or credits owed.

Taxpayers should visit IRS.gov for information and answers to common tax questions

• The IRS Interactive Tax Assistant helps taxpayers find answers tax questions based on their specific circumstances. Taxpayers can use it to determine if they must file a tax return, their filing status, if they can claim a dependent, if the type of income they have is taxable, if they're eligible to claim a credit or if they can deduct expenses.
• IRS Tax Topics contain general individual and business tax information. If taxpayers don't find the answers to their question, they can check Frequently Asked Questions.
• The Let Us Help You page lists many other online resources.
• Taxpayers can find IRS forms, instructions and publications they need to file tax return at Forms, Instructions & Publications.
• Once a taxpayer has filed their return, they can track the status of their return with the Where's My Refund? tool at IRS.gov/wheresmyrefund.

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Taxpayers who aren't able to file by the April 18, 2023, deadline can request an extension before that deadline, but they should know that an extension to file is not an extension to pay taxes. If they owe taxes, they should pay them before the due date to avoid potential penalties and interest on the amount owed.

Taxpayers who request a six-month extension to file their taxes have until October 16, 2023, to file their 2022 federal income tax return.

How to request a free extension to file for a return with no tax due

Individual taxpayers, regardless of income, can use IRS Free File at IRS.gov/freefile to request an automatic six-month tax-filing extension. Alternatively, taxpayers can file Form 4868, Application for Automatic Extension of Time to File.

How to request an extension when making a payment for a return with taxes due

Taxpayers can choose to submit an electronic payment and select Form 4868 or extension as the payment type. The IRS will count it as an extension automatically, and taxpayers won't need to file Form 4868.

Victims in FEMA disaster areas may have an automatic extension

The IRS may offer an automatic extension to areas designated by the Federal Emergency Management Agency. To check whether an area is included, see Tax Relief in Disaster Situations. Taxpayers in the affected areas do not need to file any extension paperwork, and they do not need to call the IRS to qualify for the extended time.

U.S. citizens and resident aliens abroad and military members in combat zones may have more time to pay

Taxpayers living overseas, including members of the military and eligible support personnel serving in combat zones may also have extra time to file their tax returns and pay any taxes due.

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