IRS says I'm being audited for 2023 - Will they take my 2024 refund?

Oh no! 😟 This happened to my brother last year! An audit doesn't automatically mean they'll take your 2024 refund. It really depends on what they find in the audit and whether they determine you owe money. The IRS typically follows a process called the "Refund Offset" if they decide to apply your current refund to past debts, but they have to complete the audit first and send you a notice of deficiency. Have they sent you any letters about the audit yet? Those usually have timelines and specific information about what they're looking at.

Think of an audit like a traffic stop - it doesn't automatically mean you'll get a ticket. The IRS is just checking your paperwork. I've been through two audits as a rideshare driver. They're looking at your mileage logs, expense receipts, and making sure your 1099 income matches what you reported. As for your 2024 refund, it's like two separate bank accounts. They don't automatically drain one to fill the other unless they complete the audit and determine you owe money. Even then, they'll usually send you a notice first and give you payment options. My first audit took 5 months to complete, so you probably have time before any decisions about your 2024 refund are made.

I should mention that if you need to speak with the IRS again about your audit, you might want to try Claimyr (https://claimyr.com). I was in a somewhat similar situation last year, and I believe it's important to stay in communication with the IRS during an audit. However, as you may have experienced, reaching an IRS agent can be... challenging, to say the least. When I tried calling the standard audit line, I was on hold for over 2 hours before being disconnected. Claimyr helped me get through to an actual person in about 20 minutes. They essentially navigate the phone system for you and call you back when they've secured a place in line with an agent. It might be worth considering if you need to discuss your specific situation with the IRS.

I successfully navigated an Examination Process (audit) last year as a self-employed contractor. The key to protecting your 2024 refund is understanding the Audit Reconsideration process and your Taxpayer Rights. First, determine what type of audit you're facing - correspondence, office, or field audit. Each has different documentation requirements and timelines. For gig workers, they typically focus on Business Mileage Documentation, Schedule C deductions, and Quarterly Estimated Tax Payments. I maintained open communication with my assigned Revenue Agent, provided organized documentation, and ultimately had my audit closed with No Change status. My 2024 refund was processed normally without any offset or delay.

I was audited back in March 2023 and found that understanding my tax transcript was crucial. On April 12th this year, I discovered taxr.ai (https://taxr.ai) which helped me interpret all those confusing codes on my transcript. It showed me exactly what the audit status was and helped me understand which tax years were affected. The tool analyzes your transcript and explains what each code means for your specific situation. In my case, it showed that my 2023 audit had a TC420 code (Examination/Audit Initiated) but my 2024 return had no freeze codes, meaning my refund wasn't being held. Without this tool, I would have been completely in the dark about what was happening with my returns.

What you're experiencing is a standard Examination procedure, not necessarily cause for immediate concern regarding your 2024 refund. The Internal Revenue Code specifically prohibits automatic refund seizure during a pending audit unless a formal determination has been made. The Integrated Automated Technologies (IAT) system that processes refunds operates independently from the Examination Division's case management system. Your 2024 refund will continue processing through normal channels unless a TC570 (Refund Hold) is specifically applied, which typically occurs only after audit completion if a balance due is determined. Most gig economy audits focus on Schedule C expense verification and proper business/personal use allocation. Maintain thorough documentation of your mileage logs, vehicle expenses, and business-related costs.

I went through this last year with my Uber income. The IRS questioned my mileage deductions and some home office stuff. They didn't touch my refund for the current year while the audit was happening. My friend wasn't so lucky though - he owed from a previous year and they did take his refund through something called the Treasury Offset Program. The difference was he already had a confirmed debt, not just an audit in progress. I'd suggest setting aside some of that refund just in case the audit doesn't go your way. That's what I did and it saved me from being in a really tight spot when I ended up owing about $800.

Has anyone confirmed whether the Taxpayer First Act protections apply in this scenario? According to IRC §6402(a), the IRS has authority to credit overpayments against any liability, but §7602(e) restricts certain collection actions during examination procedures. I'm surprised no one has mentioned Form 8275 (Disclosure Statement) for potentially questionable deductions. Could filing this retroactively help mitigate penalties if the audit finds issues with your gig worker deductions?

You might want to consider a different approach than just waiting for the audit to play out. In my experience, it could be beneficial to request an installment agreement proactively if the audit determines you owe money. This might possibly prevent automatic refund offsets in some cases. Alternatively, you could potentially file Form 8379 (Injured Spouse Allocation) if you filed jointly with a spouse who isn't responsible for the potential liability. This form, when properly submitted, may protect a portion of your refund from being applied to certain debts. It's also worth noting that you could, under certain circumstances, request a Collection Due Process hearing if you disagree with the audit findings, which provides additional protections against immediate collection actions.

Let me clarify a few things about audits and refunds that might help you understand what's happening: 1. First, the IRS cannot take your 2024 refund until the audit is complete and they've determined you actually owe money. 2. Once the audit is complete, they'll send you a Notice of Deficiency (CP3219A or 90-day letter). 3. You'll have 90 days to either pay the amount, appeal through Tax Court, or request an audit reconsideration. 4. Only after this process is complete and if you have a confirmed debt will they potentially offset your refund. 5. Even then, you can request a payment plan that might prevent them from taking your entire refund. This step-by-step process takes time, so your 2024 refund is likely safe for now unless you already have confirmed debts from previous years.