Tax season can be stressful, especially when your refund is delayed or you spot unfamiliar codes on your IRS transcript. The IRS uses these codes to communicate critical information about your tax return, from refund holds to audit notifications. Understanding these codes empowers you to take control of your tax situation.
In this guide, we’ll break down the most common IRS tax transcript codes, explain why they appear, and provide step-by-step solutions to resolve them. We’ll also share tips for preventing issues and direct you to official IRS tools.
What Is an IRS Tax Transcript?
An IRS tax transcript is a summary of your tax return, including filed forms, adjustments, and account activity. It’s divided into four types:
- Return Transcript: Details your filed return (no amendments).
- Account Transcript: Shows payments, penalties, and adjustments.
- Wage & Income Transcript: Lists W-2s, 1099s, and other income reported to the IRS.
- Verification of Non-filing Letter: Confirms you didn’t file a return for a specific year.
Why Transcripts Matter:
- Track refund delays.
- Verify income for loans or mortgages.
- Resolve disputes or audits.
Get your transcript online: IRS Get Transcript Tool.
How to Read IRS Transcript Codes
Transcript codes are 3-digit numbers paired with brief descriptions. They appear in the “Transactions” section of your Account Transcript, listed chronologically. Codes starting with “8” (e.g., 846) are typically positive (refunds), while codes like 570 or 424 signal issues.
Key Sections to Review:
- Code 150: Confirms your return was processed.
- Codes 766/768: Credits applied (e.g., Child Tax Credit).
- Code 846: Refund issued.
Most Common IRS Transcript Codes Explained
Below, we decode the top 12 IRS transcript codes, their triggers, and how to respond.
1. Code 570: Additional Account Action Pending
Meaning: A temporary hold on your refund due to discrepancies.
Reasons It Appears:
- Income mismatches: The IRS found inconsistencies between your reported income and their records (e.g., unreported 1099 income).
- Suspected fraud: Identity theft flags or suspicious deductions.
- Math errors: Incorrect calculations for credits or taxes owed.
- Missing forms: No W-2 or Schedule C attached.
What to Do:
- Check for linked codes: Code 971 (notice sent) often follows 570.
- Wait 1-2 weeks for an IRS letter explaining the issue.
- Submit requested documents via your IRS Online Account or mail.
- Follow up after 30 days if unresolved (call 1-800-829-1040).
Example Scenario:
Sarah’s refund was delayed with Code 570. The IRS later sent a notice (Code 971) requesting her missing 1099-G form for unemployment income. She uploaded it online, and her refund was released in 3 weeks.
2. Code 971: Notice Issued
Meaning: The IRS mailed you a notice or letter.
Common Notices:
- CP05: Random review of your refund.
- CP2000: Proposed changes due to income discrepancies.
- CP501: Balance due reminder.
How to Respond:
- Read the notice carefully: It will specify deadlines and required actions.
- Dispute inaccuracies: Use the provided response form or write a letter with documentation.
- Pay balances promptly to avoid penalties.
Pro Tip: Access digital copies of notices via your IRS Online Account.
3. Code 846: Refund Issued
Meaning: Your refund has been approved and sent.
Timeline:
- Direct deposit: 3-5 business days after Code 846.
- Paper check: 3-4 weeks.
Track Your Refund: Use the Where’s My Refund? tool for updates.
What If You Haven’t Received It?
- Confirm your bank details.
- Contact the IRS if it’s been over 30 days.
4. Codes 766 and 768: Tax Credits Applied
- Code 766: A refundable credit (e.g., Earned Income Tax Credit) was applied.
- Code 768: Non-refundable credit (e.g., Child Tax Credit).
Why Credits May Be Reduced:
- Income exceeds eligibility thresholds.
- Dependent errors (e.g., incorrect SSNs).
Fix It: Use the EITC Assistant to verify eligibility or file an amended return (Form 1040-X).
5. Code 290: Additional Tax Assessed
Meaning: The IRS adjusted your tax liability, increasing what you owe.
Common Triggers:
- Audit findings (e.g., disallowed deductions).
- Underreported income from gig work or investments.
Responding to Code 290:
- Review the adjustment notice (e.g., CP22A).
- Pay the balance via the IRS Payment Portal.
- Dispute errors with Form 12277 or a written explanation.
Avoid Penalties: Set up a payment plan if you can’t pay in full.
6. Code 424: Audit Referral
Meaning: Your return is under examination.
Audit Triggers:
- High deductions relative to income.
- Random selection.
- Cryptocurrency or foreign income.
Audit Survival Tips:
- Gather receipts, bank statements, and logs.
- Consult a tax professional.
- Never ignore IRS correspondence.
7. Code 420: Under Review
Meaning: The IRS is manually reviewing your return.
Causes:
- Complex business or investment income.
- Prior-year errors.
Response:
- Wait 30-60 days for an update.
- Call the IRS if no progress.
8. Code 810: Refund Frozen
Meaning: Refund delayed due to fraud concerns.
Next Steps:
- Complete Identity Verification if prompted.
- File Form 14039 if you’re an identity theft victim.
9. Code 1120: Amended Return Received
Meaning: The IRS received your Form 1040-X.
Processing Time: Up to 20 weeks.
Track Status: Use Where’s My Amended Return?.
10. Code 826: Credit Transferred
Meaning: A credit was applied to another tax year or debt.
Example: Your refund was offset to pay student loans or child support.
Check Offsets: Contact the Bureau of Fiscal Service at 1-800-304-3107.
11. Code 446C: CP2000 Notice
Meaning: The IRS proposes changes due to income discrepancies.
Respond Within 30 Days:
- Agree: Sign and return the notice.
- Disagree: Submit proof (e.g., corrected 1099s).
12. Code 151: Tax Due
Meaning: You owe taxes after return processing.
Avoid Penalties:
- Pay in full via Direct Pay.
- Request a payment plan.
How to Prevent Common Transcript Code Issues
- File Accurately: Double-check SSNs, income, and credits.
- E-File: Paper returns take 6+ months to process.
- Verify Identity Annually: Use ID.me to avoid fraud flags.
- Update Your Address: Prevent missed notices via Form 8822.
When to Contact the IRS
- You disagree with an adjustment.
- A notice demands payment you’ve already made.
- Your refund is delayed 21+ days after approval (Code 846).
Best Times to Call: Early mornings (7 AM–8 AM local time).
Key Takeaways
- Don’t panic: Most codes resolve with timely action.
- Keep records for 3+ years: Audits can occur retroactively.
- Use IRS tools: Track refunds, transcripts, and notices online.
For complex cases, consult a tax professional or the Taxpayer Advocate Service.
Need More Help?
By mastering these codes, you can tackle IRS issues confidently and keep your finances on track.
