Code 840 vs 846 Refund Issued - Will I Get a Paper Check Instead of Direct Deposit?

Oh my goodness, I JUST went through this exact situation last month! Code 840 typically indicates an offset refund where they've adjusted your refund amount for some reason (like past tax debt, student loans, child support, etc.). It's NOT the same as 846 which is a straight refund! I freaked out when I saw it because I was worried they were taking my whole refund for something I didn't even know about! 😱

I experienced this situation in February. According to IRM 21.4.1.3.1.1, code 840 indicates a refund freeze pending additional review, not necessarily an offset. In my case, they were verifying my Schedule C income. Per Publication 5344, this could delay your refund by 45-60 days from the filing date. The urgency here is to verify if you have any notices in the mail, as the IRS is required by IRC Section 6213(a) to notify you of any review actions. Check your transcript for a 971 code which would indicate a notice was sent.

I'm not 100% certain, but I believe code 840 might mean they're reviewing your return before issuing the refund. This happened to me last year... I tried calling the IRS for 3 weeks straight with no luck. Finally used Claimyr (https://claimyr.com) and actually got through to a human in about 30 minutes. The agent confirmed it was just a random review and my direct deposit was still coming, just delayed. If you're worried about your business cash flow, might be worth the fee to get a definitive answer instead of waiting for weeks.

I've seen code 840 on my transcript twice over the past 5 years. Here's what happened each time: • 2020 return: Code 840 appeared, then 5 days later got code 846 with direct deposit date • 2023 return: Code 840 appeared, then got a letter requesting verification of identity, after I responded got code 846 In both cases, my direct deposit information remained intact. The 840 seems to be a processing step rather than a payment method indicator. If you check your account transcript daily, you'll likely see movement within 7-14 days.

FYI - had this exact issue last yr w/ my biz return. Code 840 stayed on transcript for 17 days, then suddenly changed to 846. DD info was preserved, got $ in acct 2 days later. BUT...friend had same code and ended up w/ paper check bc he had entered wrong routing # on his return. Might wanna double-check ur DD info just to be safe. The system sometimes catches errors during that 840 review period and defaults to paper if there's any question abt the bank info.

Based on my experience as a bookkeeper for multiple small businesses, Transaction Code 840 specifically indicates a refund freeze, which is different from the standard Transaction Code 846 (refund issued). The freeze is typically temporary while the IRS conducts additional verification on your return. This does not automatically mean you'll receive a paper check instead of direct deposit - that determination is made separately. However, if the verification process identifies issues with your banking information, they may default to issuing a paper check as a security measure.

I'm dealing with code 840 on my transcript right now too! Filed my return 3 weeks ago and saw this pop up yesterday. Reading through everyone's experiences here is really helpful - sounds like it's more of a processing hold than anything to panic about. @Naila Gordon, for your business cash flow planning, it seems like most people are seeing resolution within 2-3 weeks based on what others shared. I'm going to keep checking my transcript daily and see if it changes to 846. Has anyone here actually ended up with a paper check when they had direct deposit set up correctly? That's my main concern since I need the funds to hit my account for quarterly tax payments.

I've been dealing with code 840 for about 10 days now and wanted to share what I learned from calling the IRS (finally got through after multiple attempts). The representative confirmed that 840 is indeed a refund freeze for additional review, but she emphasized that it doesn't change your payment method preference. If you selected direct deposit and your banking info is correct, you'll still get direct deposit once it processes to 846. The paper check scenario mainly happens if there's an issue with your bank account info during their verification process. She also mentioned that business returns with Schedule C often trigger these reviews more frequently than individual returns, which might explain why you're seeing this with your business expenses situation. The timeline she gave me was 2-4 weeks from when the 840 first appeared, so you might want to factor that into your cash flow planning. Hope this helps ease some of the uncertainty!

I've been through this situation multiple times as a tax preparer, and wanted to clarify some of the confusion I'm seeing in the comments. Code 840 is specifically a "Refund Freeze" transaction code, not an offset or standard processing step. It means the IRS has flagged your return for manual review before releasing your refund. This could be due to various factors - discrepancies in reported income, large deductions relative to income, or even random compliance checks. The good news is that your direct deposit information remains intact during this process. I've never seen a case where 840 resulted in a paper check unless there was already an issue with the banking information on file. Most of my clients see the freeze release within 14-21 days, at which point it changes to 846 and the direct deposit processes normally. For your business cash flow planning, I'd budget for a 3-week delay from when you first noticed the 840 code. Keep checking your transcript daily - once you see any movement (additional codes or changes), resolution typically happens quickly after that.

I'm going through this exact same situation right now! Filed my Schedule C return about 18 days ago and just saw the 840 code appear on my transcript yesterday. Like you, I'm really concerned about the timing since I have quarterly estimated payments due next month and was counting on this refund to help with cash flow. Reading through all these responses has been incredibly helpful - it sounds like the consensus is that 840 is a temporary freeze for review rather than a change to paper check. I'm planning to check my transcript daily and budget for about 3 weeks total delay based on what the tax preparer mentioned. Has anyone here who got the 840 code actually received their refund yet? Would love to hear about successful resolutions to help ease my anxiety about the business expenses timing!

I've been through this exact scenario twice in my business tax filing experience. Code 840 appeared on my 2022 return and lasted 16 days before switching to 846 - direct deposit came through normally 2 days later. Same thing happened with my 2023 return, but that one only took 11 days to resolve. In both cases, I had substantial business equipment purchases that likely triggered the review. The key thing I learned is that 840 doesn't affect your payment method at all - if you set up direct deposit correctly, that's how you'll receive it once the review clears. For cash flow planning, I'd recommend budgeting for 21 days from when you first saw the 840 code, which gives you a buffer beyond what most people are experiencing. One tip that helped me stay sane: set up daily transcript checking at the same time each day (I do it with my morning coffee) rather than obsessively checking multiple times. The code changes usually appear overnight, so checking once daily is sufficient and less stressful than constantly refreshing!

I'm dealing with the exact same situation right now - code 840 appeared on my transcript about 5 days ago and I've been stressed about whether I'll get my refund via direct deposit or if they'll switch to a paper check. Reading through everyone's experiences here has been incredibly reassuring! It sounds like the consensus from multiple people who've actually been through this is that 840 is just a temporary review hold and doesn't change your payment method. I'm particularly relieved to hear from the tax preparer that direct deposit info stays intact during the 840 process. My situation is similar to yours @Naila Gordon - I need this refund for business cash flow and can't afford unexpected delays. Based on all the timelines people have shared (mostly 11-21 days), I'm going to plan for about 3 weeks total and check my transcript daily. Thanks everyone for sharing your real experiences - this community knowledge is so much more helpful than trying to decipher IRS publications on my own!

I went through this exact situation about 8 months ago and wanted to share my experience to hopefully ease some concerns. I had code 840 appear on my transcript after filing my Schedule C return with significant home office and equipment deductions. Like many of you, I was worried about cash flow timing for my business. The 840 stayed on my transcript for exactly 14 days, then switched to 846 on a Tuesday morning, and I had my direct deposit in my business account by Thursday. The key thing that helped me was calling the Taxpayer Advocate Service after about 10 days - they couldn't speed up the process but confirmed my direct deposit info was still valid and that 840 reviews are actually quite common for business returns with larger deductions. One practical tip: I started tracking the cycle dates on my transcript because the IRS typically updates accounts on specific processing days each week. Once you know your cycle, you can focus your daily checks on the days when changes are most likely to occur. This saved me from constantly refreshing and helped manage my stress levels while waiting for resolution.