Tax Refund Offsets Pay Unpaid Outstanding Debts
Many people are excited about tax season because they're expecting a nice refund - maybe to pay off debt, splurge a bit or SAVE. However, many taxpayers are unfortunate and have past due debts like taxes owed, or other federal and state debts (like child support) being collected through the The Treasury Offset Program. Here are some facts we should keep in mind about tax refund offsets.
1. Offsets to Pay Certain Debts. The BFS (Bureau of the Fiscal Service) may also use part or all of your tax refund to pay certain outstanding debts such as:
Federal tax debts.
Federal agency debts like a delinquent student loan.
State income tax obligations.
Past-due child and spousal support.
Certain unemployment compensation debts owed to a state.
2. Notify by Mail. The BFS will mail you a notice if it offsets any part of your refund to pay your debt. This notice usually comes AFTER you realize your tax refund has been intercepted. The notice will list the original refund and offset amount. It will also include the agency that received the offset payment and their contact information.
3. Injured Spouse Allocation. If your spouse has any of the debts listed above and you are not LEGALLY RESPONSIBLE to repay the debt, you can claim injured spouse on a married filing joint return and only a portion of the refund will be taken as an offset. To get your part of the refund, your preparer (or yourself) must file Form 8379, Injured Spouse Allocation.
4.Be Prepared. You can call the BFS Treasury Offset program BEFORE you file your taxes to see if there is a claim for an offset flagged on your social security number. The number to call is 1-800-304-3107. The system is automated and you don't have to speak with anyone.
Until next time,
Monique
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