Created: October 17, 2023|Updated: May 6, 2024

IRS CP49 - The IRS Took All or Part of Your Refund


You've been looking forward to your tax refund all year long, but instead of a big payment, you just got IRS Notice CP49. Ugh! This letter says that the IRS took some or all of your tax refund. 

Wondering why you got this notice? Trying to figure out how to respond? Then, keep reading. This guide explains everything you need to know.

What Is Notice CP49?

IRS Notice CP49 means that the IRS took all or part of your refund for back taxes. If you owe taxes for a previous year, the IRS takes your tax refund. Then, the agency sends you this notice letting you know how much they took.

How to Read Notice CP49

At the top, the notice usually says something to the effect of, "We applied your 2022 Form 1040 overpayment to an unpaid balance from 2021." Then, the form says refund due or tax due followed by an amount. To the right, you should see a summary. This lists the amount and year of your overpayment, the amount and year of the tax paid, and any remaining amounts due. 

The summary varies based on the situation. For example, if your current refund covers all of your unpaid tax debt and the IRS is sending you the rest of the refund, you'll see something like this. 

Overpayment for 2022: $1,000
Amount applied to tax owed for 2021: $800
Remaining balance due for 2021: $0
Refund due: $200

However, if your current year's refund was not enough to cover the prior year's tax debt, you may see a summary like this:

Overpayment for 2022: $1,000
Amount applied to tax owed for 2021: $1,000
Remaining balance due for 2021: $500
Refund due: $0

In the above scenario, you do not get a refund for 2022, and you owe $500 tax for tax year 2021. You should contact the IRS to make arrangements to pay the tax due for that year.

What Is an Overpayment?

An overpayment is when you pay more tax than you owe. For example, if your employer withheld more tax than you owe, that will show up as an overpayment on your tax return. Similarly, if you are self-employed and paid more estimated tax than you needed to, you will also have an overpayment.

What Happens to the Rest of the Refund?

The IRS will mail you the rest of your tax refund. Generally, even if you requested direct deposit, the IRS will still mail you a check if you receive Notice CP49. Unfortunately, this can delay your refund for a few weeks, but typically, you should get the check within a couple of weeks of getting this notice.

Why Do I Owe Back Taxes?

If you weren't aware that you owed back taxes, you're probably surprised that you received Notice CP49. People can end up owing taxes without knowing about it in a few different scenarios, such as the following: 

  1. You filed a return, and the IRS made changes that led to a tax bill, 
  2. You forgot to file, and the IRS generated a substitute for return that led to a tax bill, 
  3. The IRS selected you for an audit, you never responded, and the agency adjusted your return, 
  4. The IRS assessed a late filing or payment penalty on your account, or
  5. Your spouse told you they paid your taxes but lied.

In the first four situations, the IRS would have sent you letters, but you may have missed them if you moved. If your spouse misled you, you should look for innocent spouse relief

What Is

Most legitimate IRS notices contain a link to an IRS webpage with info about the notice. The short link goes directly to an IRS page about Notice CP49.

This webpage explains the basics of CP49, and it answers some common questions people have about this notice. Unfortunately, though, the page doesn't provide any details about why you might have an old tax bill that you weren't aware of.


What Should I Do If I Receive CP49

First, review the notice carefully and make sure that you agree with it. If you believe that you don't owe any tax for the year noted on this notice, contact the IRS. You can set up an online account that allows you to see your tax returns and payments for each year. Or you can call the IRS directly to ask about the tax debt.

If you agree with the information on the notice and you're getting a partial refund, you don't have to do anything. Just wait for your refund. Unfortunately, this adjustment will delay your refund. And even if you requested direct deposit on your tax return, the IRS will mail your check. 

If the IRS took all of your refund and you still owe for the previous tax year, you should make arrangements to pay the rest of the debt. If you can afford to pay in full, do so — that will stop any more penalties or interest from accruing on your account. Otherwise, look into payment plans, offers in compromise, or other relief options. 

What If the IRS Took My Refund for My Spouse's Debt?

If the IRS took your refund for your spouse's tax debt, you can request your portion by making an injured spouse claim. For example, if the unpaid taxes were due to a return that your spouse filed separately or before you were married, you should be able to get relief. When you apply, the IRS will calculate which portion of the refund was related to your income, and then, you will get that portion back. 

Note that an injured spouse claim is not the same as an innocent spouse claim. Injured spouse applies when the IRS takes your refund for your spouse's tax debt. Innocent spouse applies when your spouse understates their income, claims credits incorrectly, or doesn't pay the tax bill on a joint return without your knowledge. 

How to Get Help With CP49

If you need help with CP49 or any other IRS notice, reach out to a local tax professional. Use TaxCure to search for a CPA, enrolled agent, or tax attorney in your local area. When you do the search, use the filters to narrow down the results to find someone who has experience with your specific problem. Don't wait — get help for your tax issues today.

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