When you file your federal tax return, you can usually expect to receive your refund as quickly as eight to 15 days later. Some taxpayers are surprised to find that their refund has been reduced or withheld completely to meet certain types of debts. Congress has authorized the Federal Management Service, which issues the actual IRS tax refund checks, to reduce refunds for four specific reasons.
Four Reasons Your Tax Refund Can Be Reduced
The Federal Management Service will reduce or "offset" your tax refund for any of the following reasons: unpaid child support; unpaid non-tax debt to a federal agency (unpaid student loans is an example); unpaid state income taxes; and certain debts associated with unemployment compensation paid by a state.
Notice of Offset
When the Federal Management Service reduces or withholds your tax refund, you will receive a notice of offset. The notice will tell you the name of the agency that received your refund, along with the address and telephone number. Neither the IRS nor the Federal Management Service can help you if you want to contest the collection action. You must contact the agency that received your refund.
Child Support Payments
It is common for child support payments to be taken from a taxpayer's federal tax refund. The action is initiated by the local state agency that enforces child support orders. This agency informs the Federal Management Service, which is then obligated to collect the money from your tax refund. Your notice of offset will provide the contact information for you to discuss this collection action.
IRS Form 8379, Injured Spouse
Most married couples file their tax returns with the married filing jointly status. If you are married to someone who owes child support payments, your joint refund will be taken to pay the debt. In this case, you have been "injured" because your share of the refund was taken.
IRS Form 8379, Injured Spouse, allows you to allocate income, deductions, tax credits and refund between you and your spouse. By using this form, the "injured" spouse can receive her portion of the refund, while the balance is paid for child support.