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Who Can Take Your State Tax Refund? (TOP 5 Tips)

Federal law allows only state and federal government agencies (not individual or private creditors) to take your refund as payment toward a debt.

Why did the IRS take my refund?

  • The most common reason for a tax refund is that your employer withheld more in taxes over the course of the year than you owed. Self-employed people can receive refunds as well if they overpay estimated taxes.

Why was my state refund taken?

State and federal government agencies can garnish your state tax refunds in order to pay down a debt. Individual or private creditors may not take your refund.

How do you know if your state refund was taken?

Call the FMS at 1-800-304-3107 to find out if your refund was reduced because of an offset. Most commonly, the offset is taken for:

  1. Past due child support;
  2. Debts owed to a federal agency;
  3. Unemployment debts owed to the state;
  4. Past due federal student loans;
  5. Unpaid state income tax.

How do I know if my taxes are going to be taken?

The IRS provides a toll-free number, (800) 304-3107, to call for information about tax offsets. You can call this number, go through the automated prompts, and see if you have any offsets pending on your social security number.

Is the IRS federal or state?

Founded in 1862, the Internal Revenue Service (IRS) is a U.S. federal agency responsible for the collection of taxes and enforcement of tax laws. Nearly 90% of tax returns are filed electronically.

Will the IRS take your state refund?

Under the State Income Tax Levy Program, the IRS can levy (take) your state tax refund to offset back taxes, addressing any tax debt you might owe. If this happens, the state will give you notice of the levy.

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Who offset my tax refund?

The IRS makes offsets for past due federal taxes. All other offsets are handled by the Treasury Department’s Bureau of the Fiscal Service (BFS), previously known as the Financial Management Service (FMS). For federal tax offsets, you’ll get an IRS notice.

How do I find out who intercepted my tax refund?

Call the FMS at 1-800-304-3107 to find out if your refund was reduced because of an offset. Call the IRS Taxpayer Advocate Service at 1-877-777-4778 (or visit www.irs.gov/advocate) if you feel your refund was reduced in error. The service is free.

How long does it take to get state taxes back?

Generally, you can expect to receive your state tax refund within 30 days if you filed your tax return electronically. If you filed a paper tax return, it may take as many as 12 weeks for your refund to arrive – or longer, if your state has been or still is under social distancing restrictions.

Will I be notified if my tax refund is garnished?

BFS will send you a notice if an offset occurs. The notice will reflect the original refund amount, your offset amount, the agency receiving the payment, and the address and telephone number of the agency. BFS will notify the IRS of the amount taken from your refund once your refund date has passed.

Will the IRS garnish my tax refund 2021?

Federal law allows only state and federal government agencies (not individual or private creditors) to take your refund as payment toward a debt.

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Will my refund be garnished 2021?

Debt collection is suspended for borrowers who have defaulted on federal student loan debt through September 30, 2021. This means collectors will not take actions to collect payment, such as deducting from a tax refund or garnishing wages.

Do taxes vary from state to state?

State income tax rates vary widely from state to state. The states imposing an income tax on individuals tax all taxable income (as defined in the state) of residents. Such residents are allowed a credit for taxes paid to other states. Most states tax income of nonresidents earned within the state.

Why do I owe state taxes but not federal?

If you live in a state that assesses income tax, then you’ll need to file a state return along with your federal return. The tax bracket you land in at the state level can differ from your federal tax bracket, which is one reason you might owe state taxes but not federal.

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