If you’ve discovered IRS Code 290 on your tax transcript, you might be wondering what it means and how it could affect your tax refund or balance. IRS Code 290 signifies that the IRS has made an additional tax adjustment on your account. However, the code alone doesn’t mean you owe money. This guide will walk you through what IRS Code 290 indicates, why it appears, and what steps you can take if you encounter it.

What Is IRS Code 290?

IRS Code 290 is an entry on your tax transcript which means the IRS has applied an adjustment to your account. This adjustment could reflect an increase or decrease in your tax obligation or might even have no financial impact. Code 290 is used as a catch-all code for various types of account changes, including adjustments related to an IRS review or correction of filing errors.

It’s important to note that seeing this code on your transcript isn’t inherently good or bad. The impact of the adjustment depends on the nature of the change the IRS has made.

Common Reasons for IRS Code 290

Here are some typical scenarios that can trigger IRS Code 290 adjustments:

1. Audit or IRS Review

• If the IRS selects your return for review or audit, they may adjust your tax figures, such as your income or credits.
• In such cases, IRS Code 290 will appear to reflect the adjustments made.

2. Filing Errors or Corrections

• If you make a mistake on your return (like claiming the wrong deduction), the IRS may correct it.
• Code 290 will show the adjustment, which could result in either a refund correction or additional tax owed.

3. Document Matching Issues

• The IRS compares your return with data from third-party sources, like W-2s and 1099s.
• If there’s a mismatch, the IRS may adjust your account and issue Code 290 as a result.

4. Amended Returns

• If you submit an amended return (Form 1040-X), the IRS may adjust your tax liability using Code 290.

Does IRS Code 290 Mean I Owe Money?

No, not always. While Code 290 indicates a tax adjustment, it doesn’t automatically mean you owe the IRS money. Here are the possible outcomes:

• Refund Adjustment: If the IRS discovers that you are entitled to a larger refund, they may increase your refund amount.
• Neutral Adjustment: The IRS may apply a correction that doesn’t affect your refund or balance.
• Additional Tax Owed: In some cases, the IRS may assess additional taxes. If this happens, you’ll receive a notice explaining the change.

What Should You Do If You See IRS Code 290?

Here’s a step-by-step guide to what you should do if you see Code 290 on your transcript:

1. Review Your IRS Transcript

• Log in to your IRS account and access your transcript to see the details of the adjustment.

2. Wait for a Notice

• The IRS usually sends a notice explaining any significant adjustments they make to your return. Look for a CP21 or CP22 notice in the mail.

3. Contact the IRS If Necessary

• If you’re unclear about the adjustment or disagree with it, contact the IRS at 1-800-829-1040.

4. Respond to the IRS Notice

• If the adjustment results in additional taxes owed, you can pay the amount, request an installment plan, or dispute the adjustment.

How to Dispute an IRS Code 290 Adjustment

If you believe the IRS made a mistake, you have the right to dispute the adjustment. Here’s how:

1. Gather Documentation: Collect all relevant documents that support your position.
2. Submit a Written Response: Follow the instructions in the IRS notice to respond by mail or online.
3. Request an Appeal: If your dispute isn’t resolved, you can request an appeal through the IRS appeals process.

How Long Does It Take to Resolve IRS Code 290 Issues?

The resolution time for IRS Code 290 adjustments varies based on several factors:

• Automated Adjustments: Minor changes may be reflected within a few weeks.
• Disputes or Appeals: If you dispute the adjustment, it could take several months for the IRS to review your case.
• Amended Returns: Processing times for amended returns can take up to 16 weeks or more.

Key Takeaways

• IRS Code 290 indicates an additional tax adjustment, but it doesn’t always mean you owe money.
• The code can result from audits, filing corrections, or document matching issues.
• If you see Code 290, check your IRS transcript and wait for any notices from the IRS.
• If necessary, you can dispute the adjustment or request an appeal.

Need Help With Back Taxes?

Explore how to REDUCE, RESOLVE, or even ELIMINATE your back taxes through the IRS Fresh Start Program.

If you owe back taxes or have IRS issues, click here or call us directly at (877) 542-0412.

Ask for a FREE CONSULTATION.