Understanding Refund Offsets
The Internal Revenue Service (IRS) has the authority to offset tax refunds to satisfy outstanding debts owed to the federal government or other agencies. This means that instead of receiving your refund in full, the IRS may apply a portion or all of it towards these debts.
Common Reasons for Refund Offsets
- Unpaid Taxes: If you have unpaid taxes from previous years, the IRS may offset your refund to cover the balance.
- Child Support: If you owe child support, the IRS can intercept your refund and send it to the appropriate agency.
- Student Loans: Outstanding federal student loans can also trigger a refund offset.
- Other Debts: In certain cases, the IRS may offset your refund to pay debts owed to other federal agencies, such as the Department of Education or the Department of Housing and Urban Development.
How to Determine if Your Refund Will Be Offset
The IRS typically sends a notice to taxpayers whose refunds are being offset. This notice will provide details about the debt being satisfied and the amount being deducted from your refund. You can also check the status of your refund online using the IRS’s “Where’s My Refund?” tool.
Steps to Avoid Refund Offsets
To minimize the risk of having your refund offset, it’s important to:
- File your taxes accurately and on time: Errors or omissions on your tax return can delay your refund and increase the chances of an offset.
- Pay your taxes in full: If you owe taxes, make estimated tax payments throughout the year or consider setting up an installment plan with the IRS.
- Resolve outstanding debts: Contact the relevant agencies to make arrangements to pay off any debts that could potentially trigger a refund offset.
What to Do if Your Refund Is Offset
If your refund is offset, you should contact the agency that initiated the offset to discuss repayment options. You may also be able to file an appeal with the IRS if you believe the offset was made in error.
Additional Resources
Why did the IRS offset my refund?
FAQ
How do I know if my refund will be offset?
Is the IRS offsetting tax refunds 2021?
Will the IRS take my refund 2021 if I owe them?
How long will the IRS hold my refund 2021?
What if I don’t get a 2021 tax refund?
If you think you were due a refund from 2021 but you don’t receive one after you file your old tax return, all or part of your tax refund may have been offset, meaning it was used to pay past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support or other federal debts such as student loans.
Can the IRS offset a tax refund?
The IRS may offset a taxpayer’s refund and apply it to a federal tax liability, per IRC § 6402. While this authority is discretionary, the IRS must offset refunds when the taxpayer owes any other federal debt or state tax liability.
Are all debts subject to a tax refund offset?
Not all debts are subject to a tax refund offset. To determine whether an offset will occur on a debt owed (other than federal tax), contact BFS’s TOP call center at 800-304-3107 ( 800-877-8339 for TTY/TDD help).
How do tax refund offsets work?
Tax refund offsets that cover past-due federal taxes are managed by the IRS, and you should receive a notice from the agency explaining the offset. All other refund offsets are handled by the Bureau of Fiscal Services’ Treasury Offset Program, which should also send you a notice if your tax refund was used to pay debts.