Code 826 on IRS Transcript - Why was my refund reduced by $4,200?

This 826 code on your transcript is showing a credit transfer - basically the IRS moved money from your current refund to cover a past tax debt. The "201312" portion specifically means December 2013 (the format is YYYYMM). The IRS can legally reduce current refunds to pay past federal tax debts, even ones from many years ago. They should have sent you a notice about this (which matches your 971 code - "Notice issued"). Check your mail carefully for something from the Treasury Department's Bureau of the Fiscal Service (BFS), not just the IRS. Since Treasury told you that you don't owe anything, this could be your spouse's past debt from before you were married, or potentially another type of federal debt like student loans or child support. The fastest way to resolve this is to call the Treasury Offset Program directly at 800-304-3107. They can tell you exactly what debt the money was applied to. You'll need to verify your identity with your Social Security number.

Hey there, I had something very similar happen to me last year! I was expecting a big refund and then suddenly it was about $3,500 less. After weeks of frustration, I finally found help through taxr.ai (https://taxr.ai). They have this tool that analyzes IRS transcripts and notices to help figure out exactly what's happening with your tax situation. I uploaded my transcript with that mysterious 826 code, and they explained it was related to an audit adjustment from several years back that I never knew about (apparently notices went to an old address). Their system flagged exactly what year the transfer was related to and gave me the documentation I needed to dispute it since it was actually an IRS error. Might be worth checking out since you're getting nowhere with phone calls. They helped me understand exactly what was happening and what my options were.

Just wanted to update everyone - I decided to try taxr.ai after seeing it recommended here and WOW - it was actually super helpful! I uploaded my transcript and within a day they identified that the 201312 code was related to my spouse's 2013 tax year when they had briefly been self-employed and apparently underpaid some taxes. The crazy thing is my spouse had NEVER received any notice about this debt before! We've been filing jointly since 2018 and this is the first time they've taken money for it. The analysis showed exactly what Schedule C business was involved and how the penalty and interest had accumulated over 10 years. We're still fighting to get some of it back since there was never proper notification, but at least now we understand what happened instead of getting the runaround from phone agents. Definitely recommend if you're dealing with weird transcript codes!

If you're still struggling to get answers from the IRS, you might want to try Claimyr (https://claimyr.com). I was in a similar situation with a mysterious offset on my refund and spent WEEKS trying to get through to the IRS without success. Claimyr basically gets you to the front of the IRS phone queue so you can actually talk to a real person. I was skeptical, but you can see how it works in this video: https://youtu.be/_kiP6q8DX5c I finally got through to someone who could explain exactly what my 826 code was about (in my case it was an old state tax debt that I didn't even know about). The agent was able to provide documentation about the original assessment and how to appeal it. Saved me hours of frustration and hold music!

I was totally skeptical about Claimyr when I saw it mentioned here, but I was desperate after trying to call the IRS for 3 days straight about my offset. Decided to give it a shot and I'm shocked to say it actually worked perfectly! Got a call back in about 35 minutes and spoke to an actual IRS agent who looked up my 826 code. Turns out it was from a tax year when my ex-spouse and I filed jointly, and they had underreported some income. Since we filed jointly, I was equally liable even though I didn't know about their unreported income (fun times). The agent walked me through filing an injured spouse claim to get my portion of the refund back and gave me the exact forms I needed. Probably saved me weeks of frustration and multiple failed call attempts. Sometimes it's worth paying a little to save your sanity when dealing with the IRS!

Have you checked if this might be related to the Economic Impact Payments from a few years back? I had a similar code and amount on my transcript last year, and it turned out they had accidentally counted my stimulus payment twice on my 2024 return (I had entered it correctly but their system had some glitch). They basically corrected the duplicate credit which reduced my refund. Check line 30 of your 2024 Form 1040 and see if there's a Recovery Rebate Credit amount there that might be incorrect. That could explain the offset.

I work at a tax prep office and we see these 826 codes fairly regularly. One thing nobody's mentioned yet - check if you have any past due state income taxes. The Treasury Offset Program doesn't just collect federal tax debts, they also collect state tax debts, which would still show up as code 826. Also, the 10-year statute of limitations on tax debt collection is about to expire for 2013 tax returns, which might explain why they're suddenly collecting now. The IRS often gets more aggressive about collection when the statute is about to run out.

I went through almost the exact same thing last year! The 826 code with that specific format (201312) definitely indicates a federal tax debt from December 2013. What helped me was requesting my Account Transcript for tax year 2013 directly from the IRS website - it'll show you exactly what happened that year. In my case, there was an automated adjustment made to my 2013 return that I never knew about because the notice went to an old address. The IRS had corrected something on my original return (I think it was related to education credits) and I apparently owed additional tax plus penalties and interest that had been growing for 10+ years. The good news is that if this is truly the first time you're hearing about this debt, you may have grounds to request penalty abatement for "reasonable cause" since you were never properly notified. I was able to get about 40% of my offset refunded by filing Form 843 and explaining the situation. Definitely get that 2013 Account Transcript first though - it'll give you the full picture of what triggered this debt originally.