The Internal Revenue Service (IRS) often makes changes to tax returns because of mathematical errors. This step is done to ensure the current amount is paid each year.
If the IRS finds that the information on your paperwork needs to be corrected or completed, they may make changes to it. For example, if you claim a deduction or credit that you are not eligible for, the IRS may adjust your return.
Should the IRS discover that you did not report all your income on your tax return, they may make changes to it to reflect the additional money.
Sometimes, the IRS receives information from third-party sources (such as employers and financial institutions) that does not match the information reported on your tax return. In such cases, the IRS may adjust your return to reflect the correct information.
Offsetting the refund because of other debts is another common reason for not receiving the money you expect to get.
How Do I Find Out Why the IRS Offset My Tax Refund?
The best way to find out why the IRS offset a tax refund is to contact the Bureau of the Fiscal Service, or BFS, at 1 (800) 304-3107. TTY/TTD users can dial 1 (866) 297-0517 for additional support to find out where a personal tax refund was applied when the amount no longer matches the filed paperwork.
If your tax refund has been offset by the IRS, it means that they have used some or all your refund to pay off a debt that you owe to the government or another organization.
Here are some steps you can take to find out why the IRS offset your tax refund.
- Check your mail for any notifications or letters from the IRS. The agency is required to notify you of any offsets, and they should explain the reason for the activity in the letter.
- Contact the IRS directly by calling their toll-free number at 1 (800) 829-1040. They should be able to tell you why your refund was offset and provide more information about the debt.
- Check your credit report to see if you have any outstanding debts that you may have forgotten about. The IRS can offset your refund to pay off other federal debts, such as student loans or unpaid taxes.
- Contact the agency or organization that you owe the debt to, such as the Department of Education or a state tax agency, to see if they have any information about the offset.
When you take these steps, you should discover why your tax refund was offset. Although there might not be any way to claim your money because of specific obligations or responsibilities, you’ll at least know where payments were made.
Why Did the IRS Keep My Tax Refund?
If the IRS kept your tax refund, it is likely because they used some or all of it to offset a debt that you owe to the government or another organization.
Several common reasons are responsible for this outcome. The table below outlines those issues and what potential resolutions you have for getting that tax refund into your bank account instead.
| Reason for Keeping | Why It Is Kept | How to Fix the Problem |
| Owe Back Taxes | If you owe unpaid federal taxes from previous years, the IRS can keep your tax refund to pay off the debt. | The only way to receive a refund with back taxes is to settle the debt or pay it off in full. |
| Unpaid State Taxes | Your state may have requested that the IRS offset your federal tax refund to pay off the debt. | You’ll need to contact your state government to determine how much money you owe in taxes, then pay the obligation. |
| Owe Child Support | Anyone owing unpaid child support can have the IRS keep a tax refund to pay this debt. | Being delinquent can cause more issues than merely a confiscated tax refund. Fines, charges, and other legal concerns can develop. |
| Defaulted Student Loans | The IRS can keep your tax refund to pay off the debt from a defaulted student loan. This happens to spouses when a family files jointly, although some relief options could be available. | The student loan must be rehabilitated or paid off for future tax returns to be distributed to you. Payment pauses might qualify in some instances. |
| Other Federal Debt | The Treasury Offset Program (TOP) allows federal agencies to request that the IRS offset tax refunds to pay off other debts, such as unpaid fines or overpaid government benefits. | You must bring the debt obligation to $0 to begin receiving your tax refunds each year. |
If the IRS keeps your tax refund, they are required to send you a notice explaining the offset and the amount that was applied to your debt. Call the agency’s toll-free number if you have any questions or concerns about this unexpected change.
How Do I Get My Refund Back from the IRS After They Offset It?
If the IRS offsets your tax refund, it means they are using some or all of it to pay off an outstanding debt that you owe, such as a past-due tax bill or a delinquent student loan.
Some taxpayers may believe the offset happened in error. You also have the option to dispute the amount that the IRS took from the refund to pay the obligation.
Thankfully, there are some steps to take that could get your refund back.
Start by contacting the agency requesting the offset. If the refund was used to pay a debt to another federal or state department, you could speak with that department directly to try to resolve the issue.
Another option is to file an injured spouse claim. If you filed a joint tax return with your husband, wife, or qualifying domestic partner, and your refund was offset to pay a debt owed only by your spouse, you may be able to file an injured spouse claim with the IRS to get your share of the refund back.
Some people might benefit from a refund trace. If you believe that the offset was in error or the amount taken was incorrect, you can request this option from the IRS. That allows you to find the payment and verify it was correctly applied.
The agency might allow you to set up a payment plan if you owe the IRS debts, including back taxes. Although this step won’t bring this year’s refund your way, it could prevent future checks from going to other obligations.
When you encounter this issue, it often helps to see professional assistance. The help of a qualified tax professional or an experienced nonprofit organization lets you figure out what financial obligations are necessary to resolve to prevent this issue from happening another time.
What Is an Injured Spouse Claim?
An injured spouse claim is a request made by a taxpayer who filed a joint tax return with their spouse but had all or part of their tax refund withheld or offset to pay the past-due debts of the other party.
If one spouse owes money to the government or a third party, such as for back taxes, delinquent child support, or defaulted student loans, the IRS may withhold or offset any tax refund due to the couple to pay off that debt.
This issue happens most often when one spouse has a tax obligation from before the marriage, and the other spouse’s income and tax payments are separate from that issue.
In such cases, the IRS may not have a right to withhold the refund due to the spouse who is not responsible for the debt.
To file an injured spouse claim, the taxpayer must complete Form 8379, Injured Spouse Allocation, and attach it to their tax return.
What If I Owe Child Support?
Child support is considered a priority debt. The IRS is required to apply any refund due to a taxpayer who owes past due payments to support children to resolve that obligation.
In such cases, the taxpayer can still try to prevent future refund offsets by paying off the past due child support or setting up a payment plan with the state child support enforcement agency.
Once the debt is paid in full, or the payment plan is established and in good standing, the taxpayer may be able to avoid future refund offsets.
Child support enforcement is handled at the state level, and each state has its own rules and procedures for enforcing these obligations.
What to Do If a Refund Offset Occurs?
Most IRS offsets are valid. If taxpayers have a debt, especially a priority one, both spouses might not have any option but to accept the payment is gone and prevent the next one from doing the same. Setting up payment plans or paying past-due obligations are other ways to stop this issue from happening.
For a long time, I couldn’t find a job after the 2007 economic meltdown. The little work I could find barely made ends meet.
That meant we had enough money to pay the mortgage, get food, and keep the electricity on. Beyond that, it was scraping every penny from wherever we could get it.
I had several student loans at the time. I’d run out of deferments and other ways to delay. My financial advisor submitted a forbearance request, but that got denied.
There was no other option. The student loans were left unpaid.
They eventually went into default status. To be fair, the government did its best to prevent that from happening. I received several calls to pay a single month or look for other ways to reduce my obligations.
I just didn’t qualify for anything.
The first tax return year after that happened, I ended up receiving a $5,800 refund. I didn’t realize there were offset rules in place, so I was shocked when I got a letter saying the money went to my student loans.
I called to explain the situation, but there was nothing they could do. No hardship exceptions applied.
That’s when I decided to rehabilitate the loans. I did one set the first year, had my tax refund offset again, and then rehabilitated my other one. That action removed the default status, improved my credit score, and eventually brought more liquidity.
It isn’t easy if the IRS offsets an expected refund. Believe me, I know! When you can take proactive steps to resolve those concerns, you’ll start gaining access to your money once again.
