Does the IRS charge a penalty for receiving a refund check that is too large?

Question

My Mother told me that if my tax refund was too large, the IRS would charge a penalty. I have never heard of such a thing, and she had no idea what that threshold was. Any ideas?

Answer 1

No such penalty. The IRS is not required to add interest to your refund unless they take more than 45 days to mail it after filing. This means that you get no interest on your money for up to 45 days. This could be called a penalty but it is really just lost income on the money you could have invested.

Answer 2

Thanks john.... I called the IRS on Friday morning around 725 and told the lady that the WMR was saying that they never reviewed my refund, ( now i found out if i chcek too many times ypu get locked out) and I also told her that the bank that will process my refund is stating I should of received a fefund on 1/25. I asked her if she could see if my return was actually received via efile and she stated the they have received my refund and there was nothing wrong with it and I will be receiving a DD on 1/31. So that eases my mind a bit

Answer 3

As long as the money you receive is the money that you were entitled to then there is no penalty. If you however receive a large sum because you lied or committed fraud or alternatively recieved a check for more than you should have received and cashed it anyway then you would be in trouble. But overpaying your taxes throughout the year is not a crime. In fact, the IRS prefers it.

Answer 4

They can. The ideal for the IRS and taxpayer is to withhold taxes as close to even as possible.
Back before the Earned Income Credit, the IRS was more strict about over withholding, and until last year they haven't really fussed, but last tax season, people whose refunds have been large have been getting Estimated Tax Payment Schedules, meaning the IRS is probably going to start cracking down again.
For accurate withholding go to IRS website, Individual, Withholding Calculator. This may help..

Good Luck & Blessings

Answer 5

The answer is - it depends.

If the refund check is due to fraud (example - claiming things you should not have) then yes a penalty is due.

If you do not pay enough then yes they charge a penalty. (example- taxes owed last year was 10,000 and this year you owe 10,000 but only pay 5000 they charge a penalty)

I do not know of any refund penalties

Answer 6

Charge you a penalty for holding your money too long? Not hardly! You're the IRS's new best friend - you gave them an interest free loan for a year.

If your refund is that large, I suggest that you reassess your federal withholding and use the extra amount on your paycheck to invest in a nice solid stock index fund.

Answer 7

If the refund is legit, it's good. If you feel it's a mistake, take it to an independant tax preparer BEFORE you cash it, and let them look it over.
The IRS does have initials that make your skin crawl, but they are a pretty fair lot indeed. But don't take what is theirs. If the refund is yours, then it's yours.

Answer 8

Heck no, they love it! A large refund check means that you gave them an interest-free loan of the money while they had it.

Answer 9

So long as you receive no more than you are entitled to there is not a problem. If by some error they send you a check in excess of what you have coming back and you cash that check then yes you will be penalized.

Answer 10

No, they don't. Basically you are loaning that money to the federal government interest-free. We should be charging them!