Tax Code 846 on IRS Transcript 2022-2023
Tax Code 846 on your IRS Transcript indicates confirmation that your federal tax refund is approved and in process for payment. However, you will likely see several transaction codes prior to the 846 IRS code. For example, before or after your 846 code, you may notice TC 570 (adjustment), TC 898 (BFS offset/non-IRS debt), and TC 971 (Notice sent). These transaction codes alert taxpayers that extra adjustments are being made by the IRS before issuing your refund.
The IRS issues more than 9 out of 10 refunds in the normal time frame of fewer than 21 days. However, it’s possible that some tax returns may require further review and could take longer. Nevertheless, IRS code 846 indicates your refund status is approved. As a result, the reimbursement will be sent to your bank if you selected the direct deposit option. So, check with your bank regarding your refund. Banks differ in how and when they credit incoming fund transfers. Also, be advised it may take several weeks to receive your mailed paper refund cheque.
Refund Less than Expected
If you receive a return that is less than what you expected, it is OK to spend the money or cash the check. You will be notified of the difference. Once you receive the official IRS notification, adhere to the instructions. Later, it may be judged that you should have gotten more. At that time, you will be paid the difference with a separate check or incoming funds transfer.
Not Entitled to Refund Received
Occasionally, taxpayers receive a refund they are not entitled to, or if the amount is greater than expected. In that case, do not cash the check to avoid potential penalties or interest charges. If your direct deposit was more than expected, call the IRS at 800-829-1040 as soon as possible. Also, contact your bank or financial institution and explain the situation. If you get a notification from the IRS explaining a refund amount change, you should follow the instructions in the notice.
Code 846 on IRS Transcript – Reviewing Your Refund Status
Many taxpayers check their IRS account tax transcript for an update on the progress of their tax return and refund. This can be useful if no information is returned using the IRS WMR tool or the IRS2Go app. According to the IRS, tax transcripts are not intended to aid you in identifying particular refund dates. They are also not intended to display exactly how much you will receive as a refund for the current tax year. Recent tax seasons, however, demonstrate that tax transcripts can, in fact, provide helpful information. Especially if you are suffering long delays and are unable to acquire refund information via the normal channels.
The IRS recommends using specific tools to find out the status of your official government payments. For example, the official IRS information tools like Where is My Refund (WMR), IRS2Go Mobile App, or Your IRS Online Account. While these tools are helpful, they only provide limited information about current processing and payments.
Another useful resource is your IRS tax transcript. This sometimes takes time to display the most recent changes. However, it provides much more information in the transaction details area via the numerous tax codes. There is nothing improper about requesting your IRS Transcript – and it’s free. Further, it can provide assurance if you haven’t received an update in a while or simply want additional information. Given that it’s free, it’s worth downloading for some clarification in the event of a long delay. Obtaining your most recent free tax transcript makes sense. Especially, if you have hit a wall or dead end with the other IRS tools and apps. Your transcript might provide you with additional information and clues about when you might receive your return.
Code 846 on IRS Transcript – According to IRS Section 8 Master File Codes
Debits the tax module for the amount of overpaid tax (plus applicable interest) to be refunded to the taxpayer. (Source: irs.gov)
On IRS tax transcripts, transaction numbers are used internally as well as to notify individual and business taxpayers. The transaction codes identify what is currently happening with their tax return processing. For example, reasons for potential delays, when a refund will be paid, or why it was less than expected. There are dozens of IRS transaction and cycle codes. However, code 846 – Refund Issued, is one you WANT to see on your account or tax transcript. This code is issued under the Explanation of Transactions section once your return has been processed by the IRS.
Ultimately, it means the IRS is sending you a refund for the overpayment of your taxes. So, seeing this code on your transcript is a good sign that your federal tax refund has been approved. If you are following your refund status closely, you may see several other transaction codes before code 846 appears. For example, you may encounter TC 150 (acknowledgment), TC 152 (delay), TC 768 (Earned Income Credit claimed), and TC 971 (Notice sent). These IRS transaction codes show extra adjustments made by the IRS before issuing your refund.
Transaction & Cycle Code on IRS Transcript 2022-2023
A Transaction or Cycle Code (TC) is made up of three digits. They are used to identify a transaction that has been received and is being processed. Also, they keep track of actions posted to a taxpayer’s account on the Master File. Every transaction processed by automatic data processing (ADP) must contain a Cycle Code. The information resource dictionary system (IDRS) is the United States Federal Information Processing Standard used to capture metadata during a system life cycle. IRDS-specific transaction numbers are also supplied. These codes serve a number of functions:
- Maintain Accounting Controls of debits and credits.
- Cause the computer at ECC to post the transaction on the Master File.
- Allow report compilation.
- Identify the transaction when a transcript is extracted from the Master File.
Transaction Codes (TC) consist of three digits. They are used to identify a transaction being processed and to maintain a history of actions posted to a taxpayer’s account on the Master File. Every transaction processed by ADP must contain a Transaction Code to maintain Accounting Controls of debits and credits, to cause the computer at ECC to post the transaction on the Master File, to permit compilation of reports, and to identify the transaction when a transcript is extracted from the Master File. Transaction codes that are unique to IDRS are also included. (Source: irs.gov)
Transaction Code (TC) 846 Refund of Overpayment – Refund Issued
Once the IRS has processed your tax return and determined you are qualified for a refund payment, the TC 846 code will show on your transcript. On the WMR or IRS2Go app, this will be displayed as the REFUND SENT status. When refunds are delivered, the amount for TC 840 will be positive, as opposed to the negative numbers for tax credits codes (e.g., 766), which are payments owed to you by the IRS. This can be confusing but simply look at your net refund on top of your tax transcript or the figure displayed in WMR or IRS2Go.
Code 570, Code 971 & Code 768 on IRS Transcript – Credits or Refund Applied to non-IRS Debt
You may see TC 570 (adjustment), TC 898 (BFS offset/non-IRS debt), TC 768 (Earned Income Credit applied), or 971 (Notice issued) before or after your 846 code. This reflects additional adjustments the IRS has made before issuing your refund.
Code 846 Date – Looking at the correct/current tax year
The 846 code can appear several times on your tax transcripts. This reflects the ongoing issuance of IRS refunds during current and prior tax years. So, make sure you look at the correct date and the specific year. Ensure it lines up with the current tax year.
Frequently asked questions
Is the Code 846 date the same as my refund direct deposit date?
The 846 date is generally when the IRS issues the refund money or paper check confirmation. It could still be a few days before you receive the payment via direct deposit. Paper checks generally take longer to be delivered.
I received Code 841 after Code 846. What now? Rejected refund payments (TC 841)
Code 841 indicates a rejected refund payment. IRS Code 841 shows up when your banking information is incorrect or your IRS electronic payment is rejected. Transaction Code 846 followed by TC 841 reflects a reversal of the IRS 846 code. Usually, a paper check will be mailed to your home address 4 to 6 weeks after the IRS gets notified of the bounced payment.
When will I see a code 846 on my IRS transcript after filing my tax return?
Generally, the IRS says 90% of refunds are processed within 21 days. If you are in that 90% group, you should expect code 846 on your transcript within 21 days.
Tax Code 768 on your IRS Transcript indicates that an Earned Income Credit has been claimed and posted to your account in the IRS Master File. The Earned Income Tax Credit (EITC) provides a tax benefit to low- to moderate-income workers and families. If you qualify, you can use the credit to lower your tax liability and enhance your refund. If your income is low to moderate, you may be eligible for the EITC. The credit amount may change depending if you have children, dependents, are disabled or fulfill other conditions. Be aware, that your return may be delayed if you claim this credit. The IRS is required by law to hold refunds for taxpayers who claim the Earned Income Tax Credit until mid-February.