Understanding IRS Processing Codes and Their Meaning in 2020
If you’ve ever received a letter from the Internal Revenue Service (IRS), you may have noticed a string of codes and numbers on the top right corner. These codes indicate the status of your tax return and payment, and understanding them can help you take prompt actions to resolve any issues. In this article, we deep dive into IRS processing codes, what they mean and how you can interpret them.
What are IRS processing codes?
IRS processing codes are four-digit numbers that represent the status of your return, refund, or payment. These codes are used by the IRS to identify specific issues or conditions associated with each tax return and payment, such as documentation errors, missing information, or delays.
How to decode IRS processing codes?
Interpreting IRS processing codes can be quite complex. However, the first two digits of the code usually indicate the tax category of the return or payment. For instance, a code that starts with “10” signifies an individual income tax return, while “90” represents a tax liability payment.
The third digit of the code indicates the specific issue or condition related to the return or payment. For example, a code that ends with “01” means that the taxpayer is claiming an additional child tax credit, while “05” indicates that the return has math errors.
Lastly, the fourth digit in the code represents the status of the issue, such as whether it’s under review, pending, or resolved.
Examples of common IRS processing codes
Here are some of the most common IRS processing codes you might encounter:
– Code 150: Your tax return has been received and is currently being processed. It does not necessarily mean you will receive a refund, and the timing may vary depending on the complexity of your return.
– Code 806: Your refund has been offset, which means that it has been applied to a previous debt, such as outstanding student loans or unpaid taxes.
– Code 570: Your refund is being held, usually because the IRS needs additional time to review your return or verify your identity. You may receive a letter requesting additional information or documentation.
– Code 846: Congratulations! Your refund has been approved and is scheduled for release. You should receive it within a few weeks.
How to fix issues with IRS processing codes?
If you receive a notice with a processing code, take the following steps:
1. Review the code and try to understand the issue or condition related to your return or payment.
2. Gather all the relevant documents and information that were used to prepare your return or payment.
3. Use the IRS website or contact their toll-free number to get additional guidance or assistance regarding the specific code.
4. If necessary, contact a tax professional or a certified public accountant (CPA) to help you resolve the issue.
Conclusion
IRS processing codes may seem like a confusing jargon, but they are an essential part of understanding your tax return and payment status. By decoding these codes and taking prompt actions, you can save time, avoid penalties, and ensure that your tax return process goes smoothly. Remember, if you need help, reach out to the IRS or a tax professional for guidance.
