Many people find themselves expecting a tax return that never arrives; this is typically due to the IRS keeping the refund. While your refund technically belongs to you, specific situations give the IRS legal right to keep this refund. While the reasons the IRS can withhold your taxes are few, when the IRS does take the refund, there is little recourse.
If you owe back taxes, the IRS can and will keep any current refund you have coming to satisfy your back taxes debt. You will not be allowed to claim any refund until all back taxes have been paid. When your taxes are withheld to pay against back taxes, the IRS sends you a letter stating the amount still owed and requesting pay off. If you don't pay the remainder, your next year's taxes will be withheld as well.
Any unpaid school loan (as determined by the contract you signed when you got the loan) will be collected from your tax refund before any of it is sent to you. The IRS can legally hold back your taxes for any school loan that is government sponsored. This does not apply to private loans to pay for your education. The IRS cannot keep your refund to pay these loans.
Back Child Support
The IRS can keep your income tax to pay any back child support you may owe. In the case of a married couple, the IRS allows for the filing of an injured spouse claim that can prevent the money from being taken. This cannot be filed until after the IRS takes the tax refund. In this case, the spouse is not responsible for the back child support files an injured spouse (form 8379) claims to have the tax refund returned.
Federal and State Debts
In addition to the above mentioned, the IRS can keep your refund for any debt or loan associated with the federal government. This include small business loans or any type of debt that uses a federal institution for funding. The IRS can withhold for state tax and debt as well.
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