Why Was My Tax Refund Withheld?

  • Robert S. Thomas,
  •   Taxation
  •   Comments Off on Why Was My Tax Refund Withheld?


A lot of people approach tax season with dread, anticipating all of the work it will take to prepare and file their taxes. However, with that dread can come excitement about receiving a tax refund. Some of us rely on that refund and others even spend it before they receive it. Unfortunately, the IRS has the ability to give taxpayers an unpleasant surprise: it can withhold tax refunds.

Tax Refund Withholdings and “Offsets”

There are several types of debt which authorizes the IRS or the Department of Treasury to withhold, or “offset”, your tax refund. This includes delinquent child support, federal or state income taxes, student loans, or debt to another governmental agency. The IRS or Treasury Department may withhold your entire refund to apply toward your debt obligation.

How The Offset Occurs

You may be wondering how the IRS knows that you owe one of the above-mentioned obligations. The answer is that the state or federal governmental agency to whom you owe money notifies the IRS or Treasury Department of your obligation and requests that offset. The IRS will then send money from your tax refund to that agency and satisfy the obligation. If there is any money left over, you will receive that amount as your adjusted refund.

You will receive a notice from the IRS if your refund is withheld or offset. This notice will indicate the agency taking your refund, and the amount they are taking. If you believe that your refund was offset in error, you should contact the agency that collected your refund. In other words, if you did not have an outstanding debt to the agency that claimed your tax refund, and if they do not offer to remedy the error, you should quickly contact a tax attorney for further guidance.

Injured Spouse Exception

If you are married and filed a joint tax return, and your refund was withheld, you may be eligible for relief. If it was your spouse who was solely responsible for the debt, the IRS may reduce the withholding so that you can have your share of the tax refund. In order to apply for this “Injured Spouse Allocation”, you must complete Form 8379.

Contact a Tax Attorney

If the IRS is withholding your money or taking adverse action against you, I can help. The IRS has tremendous resources and utilizes every law at their disposal to collect what they believe you owe. You need a confident, skillful lawyer to help even the odds. I have handled complex tax matters for more than twenty years and have a Master of Law Degree (LLM) in Taxation, and a license to practice in the United States Tax Court. Let the Law Offices of Robert S. Thomas assist you. Call our office today at 847-392-5893 to schedule a consultation, or visit our website.

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