Can the IRS Take My Refund?

Yes, the IRS can take or withhold your tax refund if you are not in good standing with the IRS. 

To be in “good standing” with the IRS means that you are fully compliant and up to date with your tax filing and do not have a tax debt.

Below are some situations why the IRS may withhold or take your tax return this year.

1. You owe back taxes.

If you owe back taxes, you most likely will not be seeing a tax refund this year. The IRS and your state government have the authority to apply any tax refund to an outstanding tax balance.  

Even if you set up a monthly payment plan with the IRS to resolve your back-tax debt, your state or the IRS will continue to apply all tax returns toward your total tax debt until you pay your tax debt in full. 

2. The accuracy of your tax return is in question.

The IRS can hold your tax return if they have reason to believe there is an error or issue with your tax return.  

Usually, this happens when the IRS audits your tax history. If audited, the IRS may hold your tax refund until they complete the audit.

Once finalized, the IRS usually releases your tax refund to you unless the audit reveals a tax balance.

3. Your state is questioning the amount of unemployment you received. 

The IRS and your state revenue service work together to collect any tax balance you owe.

If your state believes that you collected more in unemployment compensation than you should have received (whether by fraud or failure to correctly report earnings), your state can request that the IRS offset your tax refund by the amount in question.

4. You are behind in child or spousal support payments. 

If you don’t have a tax balance and you don’t receive your tax refund, you may want to look into the status of any child or spousal support you owe.

Your state can ask the IRS to take your tax refund to cover overdue child or spousal support payments.

5. You are behind on your student loan payment.

If you are behind on your payments for a federally backed student loan, the IRS has the authority to take your refund and apply it toward past-due payments.

The federal government has currently frozen student loan payments until at least September 2021, but if you missed payments before the pandemic, your tax refund might be at risk.

How do I return to good standing with the IRS?

Research your IRS account if your tax return was withheld or taken to resolve the issue immediately. If you are not compliant with the IRS, your account is at risk of accruing penalties and interest, which can cause your tax debt to skyrocket. 

Determine how much the IRS claims you owe and if you have many years of unfiled taxes. From there, you can enroll yourself in the various IRS-approved tax relief programs. 

However, qualifying for tax relief on your own can be tricky. Sometimes, the IRS will disqualify you for confusing and unclear reasons. Your chances of qualifying for a tax relief program increase tremendously if you gain representation from a professional tax relief firm. 

Next Steps 

If you’re unsure how to get started, the tax professionals at TaxRise can help. 

We’ll review your account transcripts and negotiate directly with your IRS agent. That way, you’ll know what happened and how to get back into good standing with the IRS.

 Get help from a trusted TaxRise professional today. 

Learn how easy it is to qualify for tax savings.

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