Finding out you have a tax refund heading your way can be extremely exciting. This is your chance to finally catch up on bills, buy that item that’s been on your wish list or take a much-needed vacation. But what happens when you check the “Where’s My Refund?” tool and realize the IRS swooped in and took it? That’s right, Uncle Sam has the authority to seize your refund under certain circumstances. Here are four situations when the IRS can come between you and your money.
You have an unpaid tax debt
Let’s be realistic here, you can’t possibly expect to get a tax refund if you have an unpaid tax debt. Uncle Sam isn’t that generous, and neither is your State. They’re going to take whatever money you had coming your way and apply it to your debt. If there’s anything leftover (fingers crossed) it will be distributed to you. When you do your taxes with ezTaxReturn, we make it easy to fulfill your tax obligation by offering multiple payment options. You can choose to pay the IRS via check, direct deposit, credit card or monthly installments.
You’ve defaulted on your student loan
You can run but you can’t hide from your student loans. One way or another your lender is going to get their money. If you default on a federal student loan, the IRS can seize your tax refund to pay a portion of your debt. The good news is you won’t be blindsided. The IRS is required to give you advance notice and the opportunity to respond to the claim. This is typically done by sending a notice in the mail.
Your child support payments are past due
When you have children, both parents are responsible for the cost of raising them. If you’re ordered to pay child support, you must fulfill your obligation. Unfortunately, not everyone holds up their end up of the deal. Therefore, the Federal Tax Refund Offset Program must step in and help collect the past due payments. If the custodial parent receives benefits from the Temporary Assistance for Needy Families program and you owe more than $150, your tax refund may be intercepted. If they don’t receive benefits from the program and you owe at least $500, the IRS may seize your tax refund.
You have unemployment compensation debt
Unemployment compensation is supposed to help jobless workers stay afloat while they look for something new. But some people try to abuse the system. If you receive more unemployment compensation than you’re entitled to, you better believe that you will be paying it back.