IRS Code 806: What the Notice Means & How to Respond

IRS Code 806 is a line on your IRS Account Transcript that shows how much federal income tax and excess Social Security (FICA) tax was withheld and credited to your account for the year. It’s not a bill, a refund, or a problem, it’s just part of your tax record. If the amount shows up as a negative number, that means it’s a credit that reduces your tax due. A positive number means the IRS believes you owe more or an earlier credit was reversed. Understanding this sign convention can save a lot of stress when reading your transcript.

What IRS Code 806 Records on Your Account

Code 806 adds up all the federal withholding from every W-2 and 1099 the IRS has received under your Social Security number. If you had multiple jobs or income sources, they should all be reflected in this total. The date next to the code usually matches when your return was filed, but it can change if a late or corrected W-2 arrives. One easy way to spot problems: if Code 806 matches the total of all your Box 2s, the IRS agrees your withholding is correct.

Why a Negative 806 Amount Is Good News

A negative Code 806 means the IRS has credited that amount toward your total tax bill. It reduces your liability dollar-for-dollar and often shows up a week or two before your refund is approved (Code 846). A positive 806, which is rare, usually means a previous credit was reversed, or additional tax is due.

Sign convention: Negative = credit/refund on the way.

Positive = additional tax due or offset reversal.

Code Timeline: 150 → 806 → 766 → 846

This is the typical order of codes that show your refund is progressing. Code 806 comes after the IRS accepts your return but before your refund is approved. If you see Code 570 after 806, it means your refund is on hold for review or correction.

Reasons Code 806 Doesn’t Match Form 1040 Line 25d

Here are common reasons for mismatches between Code 806 and the federal withholding shown on your 1040:

• A W-2 or 1099 wasn’t submitted to the IRS. This is especially common with smaller employers or gig platforms that may forget to file or file incorrectly. If the IRS never receives your wage statement, they can’t credit that withholding to your account, which creates a mismatch.
• An employer reported the wrong number to the IRS. Mistakes happen, and sometimes the income or withholding amounts submitted to the IRS don’t match what’s on your copy of the W-2. That can throw off the total for Code 806 and may trigger a review.
• Duplicate Social Security numbers caused a mismatch. If your Social Security number was accidentally entered more than once (for example, on both your return and someone else’s) it can confuse the IRS’s matching system. This kind of error is rare but can lead to delays or even an IRS notice.
• A corrected W-2 (W-2c) was filed late. If your employer realized they made an error and issued a corrected W-2 after you already filed, it might not have made it into the IRS system yet. That timing difference can cause Code 806 to reflect a different number than what you expected.
• You typed the wrong withholding amount when filing. It’s an easy mistake; maybe a zero got missed, or you entered the number from the wrong box. Even a small typo can create a mismatch that causes delays or triggers a “hold” code like 570 on your transcript.

Even a small difference—like a $1 typo—can delay your refund and trigger Code 570 or a notice letter.

Reconcile Your Withholding in Three Steps

Make sure to exhaust all your options before actually contacting the IRS. Here’s a list of things you can (and should) try out before calling them:

Collect W‑2 and 1099 Forms

Make sure you’ve got all your income documents—including from second jobs, gig work, and state disability payments that might be reported on a 1099-G.

Sum Box 2 Tax Withheld Totals

Add up every Box 2 amount from your W-2s and the federal withholding boxes on your 1099s. A spreadsheet can help, or check the worksheet in IRS Publication 505.

Fix Mismatches With W‑2c or Form 1040‑X

If the numbers don’t add up, reach out to your employer or payer first. They may need to issue a corrected W-2 (W-2C). If your refund is delayed, even for a minor amount, you may still need to file Form 1040-X to fix the issue on your return.

Other Common Code 806 Issues and Solutions

Refund Delays After 806

Even after Code 806 posts, your refund might not be immediate. There’s usually a 1- to 3-week gap before Code 846 (refund issued) shows up. If Code 570 (Hold) appears, that timeline can stretch longer. The IRS recommends using “Where’s My Refund?” and waiting 21 days from your file date before calling.

Positive 806 Balances and Extra Tax Due

If you see a positive amount with Code 806, it means your credited withholding was reversed or the IRS increased your tax due after an audit or correction. Check your transcript for Codes 898 (refund offset) and 971 (notice issued) to find out what happened.

Code 570 Hold Following 806

A Code 570 after 806 usually means the IRS spotted a mismatch, math error, or needs to verify your identity. This can delay your refund by 8–10 weeks. If you get a letter like 4464C or 5747C, respond promptly. If the delay causes financial hardship, contact the Taxpayer Advocate Service.

Mistakes to Avoid With Code 806

Here are a few avoidable errors that cause unnecessary stress:

• Assuming Code 806 is the amount of your refund. Code 806 just reflects how much federal income tax was withheld and credited to your IRS account. It’s one piece of the refund puzzle, but it doesn’t tell you how much you’re getting back.
• Forgetting to include all W-2s, especially from short-term or gig jobs. It’s easy to overlook a W-2 from a side job or seasonal work, but the IRS expects your return to match all forms they’ve received.
• Ignoring a W-2 with the wrong Employer Identification Number (EIN). If the EIN is off, the IRS may not be able to match the withholding to your account. That can delay your refund or cause a mismatch on your transcript.
• Waiting until April to fix known W-2 errors or request a W-2c. If you already spotted a mistake on your W-2, don’t wait until the deadline to handle it. The longer you delay, the more likely you are to run into processing delays or hold codes that can freeze your refund for weeks.

Helpful Resources for Transcript Troubleshooting

• IRS Get Transcript Tool (Account Transcript)
• Taxpayer Advocate Service Code Decoder PDF
• TurboTax Help: Understanding Code 806
• Alleviate Tax Blog: Withholding Calculators

 

Frequently Asked Questions

1. How Soon After Code 806 Will I Get My Refund?
Usually within 7 to 21 days, unless Code 570 or another hold appears. Watch for Code 846, which means your refund has been approved.

2. What If My Employer Won’t Issue a Corrected W‑2?
You can file Form 4852 (a substitute W-2) and attach an explanation. Later, if you get a W-2c, you may need to file an amended return using Form 1040-X.

3. Does Code 806 Include Estimated Tax Payments?
No. Estimated payments are listed under Code 670 or Code 971. Code 806 only reflects withholding amounts from W-2s and 1099s.

Clear Up Code 806 for Faster Refunds

IRS Code 806 is one of the clearest signals that the IRS has processed your withholding, assuming the numbers line up. It’s worth checking early in tax season to make sure your transcript matches your return. If not, track down the problem before the IRS flags it and holds your refund. With a little prep and awareness, you can avoid delays, respond faster to issues, and get your money back without the drama.

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