The IRS Code 846: What Does Refund Issued Mean on a Tax Transcript?Personal Taxes
Awaiting tax refund approval can be stressful, especially if you don’t know how to make sense of all the codes the IRS adds to tax account transcripts.
The Code 846 Refund Issued code suggests that the IRS finished processing your tax return and approved a refund. In most cases, this code indicates that the IRS hasn’t detected any issues with a tax return during the processing stage.
However, its meaning can vary depending on a tax account transcript’s other transaction codes.
We will analyze what the Refund Issued message on a tax transcript might mean and help you understand the implications of the IRS Code 846.
So, let’s get started.
What is the Account Tax Transcript?
For those new to the e-filing process, the IRS website has the Get Transcript section where you can access different types of transcripts the IRS creates for your account.
The Account Tax Transcript contains the basic information about a tax return, such as the taxpayer’s filing status, taxable income, and when a tax return entered the Individual Master File (IMF) system.
This transcript shows the weekly updates during the processing stage for accounts on the daily and weekly processing regimen. Hence, you’ll see different transaction codes appear in your account tax transcript throughout this stage.
Code 846 is added to the transcript once the IRS concludes the review of a tax return to indicate that refund is approved. But the code doesn’t suggest that the refund is on its way to your bank account.
Understanding Tax Transcript Transaction Codes
Code 846 is just one among dozens of transaction codes the IRS uses to track the actions added to an account on the IMF system. You can find the complete list of transaction codes on the IRS website.
These three-digit codes appear in the tax transcript from when a tax return enters the IMF system until a refund reaches the taxpayer.
Code 846 is one of the last transaction codes you’ll see in your tax account transcript because it suggests that the IRS approved a refund for a specified amount.
In 90% of cases, the IRS Code 846 is added to an account transcript within three weeks from when a tax return enters the IMF system.
This period can be much longer if the tax return examination reveals that a taxpayer submitted incorrect data or insufficient documents.
Each of these actions will be documented in the tax account transcript with a different transaction code indicating why the refund is delayed.
The Meaning of Code 846
Code 846 is commonly followed by Refund Issued or Refund of Overpayment messages. You’ll see the Refund Sent message next to this code if you’re accessing your tax account transcript from the IRS2Go or Where’s My Refund? apps.3
So, it’s pretty easy to determine its true meaning. As noted, this code appears in the tax account transcript once the IRS processes a tax return and assigns a refund date to an account.
It usually means that the processing went smoothly and that no further action is required from the taxpayer. An account transcript features the following columns:
- Explanation of Transaction
Hence, the number 846 will be in the Code column, while you can find the Refund Issued message in the Explanation of Transaction column. You can also see the date and amount sections in the same row, so let’s look at what they mean.
The Date Column
The date assigned to the Code 846 doesn’t indicate when a refund will be deposited to a taxpayer’s bank account or sent as a check via mail. Instead, it shows the date when the IRS approved the taxpayer’s account as eligible for a tax refund.
Still, the date next to the Code 846 can help you determine when the refund will reach your account, but only in combination with the cycle code that indicates your account’s processing frequency.
So, if you have a daily account that is updated on Mondays, you can expect to receive a payment up to a week plus one day after Code 846 appears in the tax account transcript.
Please note that this applies to direct deposits, as the waiting time is up to six weeks for check refunds that are sent via mail.
The Amount Column
The sum you’ll see in the Code 846 row on your tax account transcript indicates the net refund amount approved by the IRS. This amount won’t be the same as the filing or withholding amount.
In other words, the amount next to Code 846 shows you how much money will be deposited into your bank account.
Reasons Why a Tax Refund Might Be Delayed
There’s no reason to overreact if the tax refund doesn’t reach your bank account a few days after Code 846 appears in your account transcript.
However, if your account transcript also contains TC 570, TC 898, or TC 971 codes, you won’t receive your payment until the IRS makes the necessary adjustments.
- TC 898 and 899 codes usually appear together, indicating that the IRS will redirect a portion or the entire refund to pay an outstanding debt. An unpaid student loan or pending state taxes can be a reason why the IRS chooses to adjust the approved refund amount.
- TC 841 will be added to a tax account transcript if the taxpayer’s bank details are incorrect. The code might also appear in the transcript if the bank rejects payment for some other reason. The IRS will send a check that should arrive within four to six weeks to a taxpayer’s address if a direct deposit is rejected.
Frequently Asked Questions about the IRS Code 846
Tax account transcripts can contain Refund Issued codes for previous fiscal years. That’s why it’s important to check the date next to Code 846 when trying to determine if your tax refund is approved.
You must contact the IRS if you think that the amount next to the Code 846 is incorrect or if you disagree with it. Keep in mind that filing a complaint and resolving the issues with incorrectly calculated tax refund amounts can take weeks or even months.
This code indicates the conclusion of the processing stage, so the IRS won’t postpone a refund or request additional documents from a taxpayer after Code 846 appears in a tax account transcript.
The IRS Code 846 is the harbinger of good news because it indicates your tax return was successfully processed and that the IRS has approved the refund.
So, in most scenarios, you can start planning how to invest your tax refund as soon as you see this code in your tax account transcript.
However, don’t forget to check if the transcript contains TC 570, TC 898, TC 898, or TC 971 codes that could indicate your refund will be adjusted to cover outstanding debt or postponed for an additional review.
If you don’t find any of these codes in your tax account transcript, you can expect your tax refund to be deposited in your bank account soon.
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.