There are a few reasons why your refund might be less than what was shown in TurboTax.
1. The IRS found a discrepancy in your return.
The IRS reviews the information you entered in your return and compares it with what they have in their database. If there are any discrepancies, they make adjustments accordingly and send your reduced refund.
Some common errors found are incorrect advance Child Tax Credit or stimulus payments amounts, which can cause significant reductions in your expected refund.
The IRS will send you a letter explaining the adjustment, but it usually takes about three weeks to arrive. If you got your refund already, check the IRS Where’s my refund? site to see what they adjusted and how it impacted your refund. It may take several days for the site to be updated.
2. You paid your TurboTax fees with your refund.
When you pay your TurboTax fees with your federal refund, the TurboTax fee plus a separate Refund Processing Service (RPS) fee are deducted from your total refund amount. So your IRS-issued tax refund might be less than the amount shown in TurboTax.
The total cost of the TurboTax fee and RPS fee combined can be anywhere from $39 to $320.
3. The IRS offset your refund.
A refund offset is when the IRS applies part of, or all, your refund toward past-due income tax, child or spousal support, student loans, or state unemployment compensation debts. If this happens, check the IRS Where's My Refund? or the Bureau of the Fiscal Service site for more information. You’ll also get a letter explaining why you didn't get your entire refund.
How to avoid refund discrepancies.
Make sure to enter the exact numbers from all of your forms and any letters you receive from the IRS on your tax return. The IRS compares everything you enter with what they have in their database, and if they find differences, they can adjust your expected refund. If you ever lose a letter you get from the IRS, you can always go to your IRS account to find the info you need. And if you need a new form, you can always reach out to the issuer for a new copy.
FAQs
You paid your TurboTax fees with your refund.
Why is my refund direct deposit or check lower than the amount in TurboTax? ›
This is called a tax refund offset. If your tax refund is lower than you calculated, it may be due to a tax refund offset for an unpaid debt such as child support.
Why is my tax refund deposit less than what I filed? ›
Why is my refund different than the amount on the tax return I filed? (updated December 22, 2023) All or part of your refund may be offset to pay off past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or other federal nontax debts, such as student loans.
Is TurboTax refund amount accurate? ›
TURBOTAX ONLINE GUARANTEES
100% Accurate Calculations Guarantee – Individual Returns: If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we'll pay you the penalty and interest.
Why is my 2024 refund so low? ›
You may be in line for a smaller tax refund this year if your income rose in 2023. Earning a lot of interest in a bank account could also lead to a smaller refund. A smaller refund isn't necessarily terrible, since it means you got paid sooner rather than loaning the IRS money for no good reason.
How do I fix direct deposit on TurboTax? ›
To edit your bank account for direct deposit of your refund in TurboTax Online:
- Sign In to TurboTax Online.
- Select "Take me to my return"
- Select "Pick up where I left off"
- Select the "File" tab (right of the screen)
- Select "Revisit" next to "Your refund info"
- Select "In my bank"
Likewise, your tax refund can be reduced if you owe past-due child support payments or debts to certain other federal agencies. If that's the case, the IRS will send you a notice about your overdue taxes and reduced refund. Otherwise, reduced-refund letters will come from the Bureau of Fiscal Services.
Why did my refund go down when I added another W-2? ›
Your refund meter changes as your numbers change. When you enter a second W-2, you add more income. Generally, more income means more taxes.
How do you know if your refund is being offset? ›
BFS will send you a notice if an offset occurs. The notice will reflect the original refund amount, your offset amount, the agency receiving the payment, and the address and telephone number of the agency. BFS will notify the IRS of the amount taken from your refund once your refund date has passed.
What if TurboTax refund is more than expected? ›
My tax refund was way more than expected. What do I do? You will receive a letter in the mail from the tax authority that issued the tax refund which will explain why the refund was changed from the amount entered on your tax return. The letter usually is sent approximately three weeks after the refund is received.
Reason 1: Changes to your income
Changes to your income last year may play a role in receiving a smaller refund this tax season. Here are some examples: Salary increase: If you got a salary increase last year but neglected to increase your tax withholding, this could lead to a smaller tax refund when you file.
Does TurboTax charge for direct deposit? ›
Nope. We don't charge you based on the refund method you've chosen. Although there may be a fee for the optional Pay With My Refund service, it has nothing to do with the fact that you've chosen to get your refund through direct deposit.
How do I know if I did my taxes correctly on TurboTax? ›
If you e-filed your tax return using TurboTax, you can check your e-file status online, to ensure it was accepted by the IRS. You'll also receive an e-mail confirmation directly from the IRS.
What happens if TurboTax makes a mistake? ›
100% Accurate Expert-Approved Guarantee: If you pay an IRS or state penalty (or interest) because of an error that a TurboTax tax expert or CPA made while providing topic-specific tax advice, a section review, or acting as a signed preparer for your return, we'll pay you the penalty and interest.
Is TurboTax always correct? ›
No matter which TurboTax version you choose, rest assured—you'll be asked simple questions and will have guidance finding every tax deduction and credit you deserve, and we guarantee 100% accurate calculations and your maximum refund.
Does TurboTax charge extra for direct deposit? ›
Although there may be a fee for the optional Pay With My Refund service, it has nothing to do with the fact that you've chosen to get your refund through direct deposit. Some banks do charge a transaction or convenience fee for direct deposits, but this isn't a fee we charge you.
