47.6 Refunds Withheld To Cover Debts

The IRS may withhold all or part of your refund if you owe federal taxes. The Treasury Department’s Financial Management Service may withhold all or part of your refund if you owe child or spousal support or federal non-tax debts such as student loans or state income taxes. If you file a joint return with a spouse who owes child support or federal debts, you may be able to obtain your share of a refund due on the joint return by filing Form 8379 (46.4).

Caution

Refund Offset for Overdue State Taxes

If you owe state income taxes, the state can refer the debt to the Treasury Department’s Financial Management Service (FMS). The FMS will offset your federal tax refund by the state tax if your address on the return is within the state seeking the offset. The state must give you written notice that the debt is being referred to the FMS and provide an opportunity for disputing the liability.

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