Tax offsets are the mechanism by which the federal government collects tax refunds to apply toward debts owed, managed through the Federal Tax Refund Offset Program. The tax refund offset might be used to pay back child support, back taxes, student loans, or other types of debt handled by the government. These offsets can be frustrating, especially if you didn’t know they were coming until your refund doesn’t arrive – you didn’t have money to pay during the year, and now you still don’t have money. If you think you might be subject to tax offset, then this is a good time to get ahead of the game and find out what it means before you find out the hard way.
Do I have an active tax offset?
If you have an outstanding debt, you may not be sure if your tax refund will be intercepted for a tax offset or not. You should receive a notification sometime before your taxes are due if there is an active tax offset, but there’s always a chance it will be overlooked at home or lost in the mail. To be sure, call the Treasury Department’s Financial Management Service and ask if you are subject to tax refund offsets.
Am I responsible for my spouse’s tax offset?
When you file a tax return and are owed a refund, the tax offset will automatically be applied if either person on a joint return have an eligible debt. However, if you don’t owe the debt and you earned at least some of the wages, then you might still be able to get some of the tax refund. This is done by filling out a Form 8379, or injured spouse form.
My spouse and I both owe; how do I control who gets the refund?
Fill out an injured spouse form even if neither of you are actually getting a cash refund due to tax offsets. The injured spouse form means that your tax return will be evaluated for fair allocation to each person on the form. Even if you’re not supposed to get any money back, it will help ensure that the portion of refund you earned will go to your debt, and only your spouse’s portion will go to his or her debt.
I already filed my taxes, so is it too late to file an injured spouse form?
If your tax refund status is still incomplete, and/or you haven’t been issued a refund yet, then it’s not too late to fill out an injured spouse form. In the case of tax offsets, the Treasury Department states that it can take several weeks to process the refund and send it to the debt-holder. An injured spouse form received before the money goes to the debtor can still be received on time. If you’re not sure, call the Financial Management Service and let them know you’d like to file an injured spouse form.
As with all things pertaining to taxes, always contact a certified accountant or other tax professional if you’re not sure about the laws and how they apply to you. The IRS offers support on specific forms and general tax questions, but can’t serve on a personalized basis in lieu of an accountant.