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If you are expecting a 2025 tax refund that has not yet arrived and/or you have received a IRS CP53E notice then the Taxpayer Advocate Service has the following guidance –
There has been a lot of information in the news about how the IRS is moving away from paper checks. While direct deposit is a safe and secure way to get your tax refund, there are scammers out there looking to capitalize on any confusion about updating your bank account information.
If you filed your tax return, are due a refund, and did not add your bank account information to the return or your banking information was incorrect, the IRS will issue you a CP53E notice.
In a nutshell if you expect to receive a paper refund check then you may be in for an extended delay. The IRS allows you to provide them with the correct banking information and the only way to do so is to update your banking information is through your IRS Online Account.
You can currently only create and/or access your IRS Online Account using your ID.me login.
The best way is to apply your overpayment to the current tax year, and reduce you tax payments to offset it.
I think that is a good thought and practice for many high income taxpayers. Back when I was working that pattern of applying the overpayment was often a usual occurrence.
Many taxpayers with K-1’s from their pass-though entities, like partnership income or S-Corp income, do not get their prior year K-1 until well after the unextended 1040 due date (April 15) so there may be some prior year taxable income surprises when the K-1 is finalized and received.
In such cases where estimated taxes will be due the next year many taxpayers will choose to lump the estimated balance due for the prior year with the following first quarter amount and pay the combined amount as the extension payment due 4/15 which just happens to be the same date as the first quarter ES payment for the next year. If the prior year tax ends up being more than expected when the 1040 was extended then they have more paid in for the prior year to lower or eliminate potential underpayment penalty and if the final return for the prior year does have a overpayment you can choose the amount of the overpayment to be applied to the next year estimated tax which is effectively paid 4/15 regardless of when the prior year return is filed and what part, if any, of the overpayment you want to to be refunded.
Another reason for making a combined payment is the owner of a closely held business they control which is organized as a pass through entity has some flexibility to control the taxable income of the business income from the prior year such as by choosing an accelerated depreciation method for those assets bought in and placed in service in the prior year.
Paper is as fleeting as …..
Nothing endures but change – Heraclitus
Bill, thanks again for the important information. This was a point of emphasis for VITA volunteers this past tax season. We had a number of clients who did not trust direct deposit and wanted paper checks. Our site lead was very understanding, but firm, and convinced most of them to switch to Direct Deposit. I have not heard any direct feedback from someone who opened for a paper check, received the notice, and chose not to comply.
Rick, our site was also very clear in explaining the new policy, still, some filers opted for paper. Later, after receiving the notice, several people called us, wanting to know what was going on. We politely explained that ‘we told you so’.