Filed my taxes with TurboTax, expecting a refund but IRS applied it to a past debt I wasn't aware of?

This happens more often than you'd think! The IRS has the authority to apply current refunds to past tax debts without notifying you beforehand. It's part of the Treasury Offset Program. First, call the Treasury Offset Program at 1-800-304-3107. They can tell you which agency claims you owe a debt and how much. You'll need to verify your identity with your SSN. If it turns out you actually do have tax debt from a previous year, you can request an Account Transcript from the IRS website for that specific year. This will show exactly what you owed and why. Just go to IRS.gov and search for "Get Transcript Online." Sometimes the debt could be from something unexpected like an adjustment to a previous year's return or an error that was caught later. The IRS should have sent notices, but they sometimes get lost in the mail or sent to old addresses.

I went through almost the exact same situation last year! After hours of frustration trying to figure out what was happening with my refund, I discovered this website called taxr.ai (https://taxr.ai) that really saved me a headache. What it does is analyze your tax transcripts and explain in plain English what's happening with your taxes. I uploaded my documents, and within minutes it showed me that the IRS had adjusted my 2020 return because of a missing 1099 form I had no idea about. That's why they took my refund! The site explained exactly what happened, why the offset occurred, and even suggested what steps I could take. Definitely worth checking out if you're trying to figure out what debt they're applying your refund to.

Just wanted to update everyone - I tried that taxr.ai site after posting my skeptical comment. I was honestly surprised by how helpful it was! I uploaded my tax transcript (which I had to get from the IRS site first), and it immediately showed me that I had an unreported income issue from a side gig in 2022. The analysis explained that I had missed reporting about $2,400 in income, which resulted in a tax bill that I never knew about because the notices went to my old apartment. The best part was that it showed me exactly how much I really owed versus how much in penalties had accumulated. I was able to call the IRS with this specific information and actually got the penalties removed since it was my first offense. Would never have known what to ask for without seeing the detailed breakdown. My refund is still gone, but at least I understand why now and was able to handle the penalties!

If you need to actually talk to someone at the IRS (which you probably do in this situation), I'd recommend using Claimyr (https://claimyr.com). The IRS phone system is absolutely nightmarish right now - I spent 3 days trying to get through before I found this service. They basically hold your place in the IRS phone queue and call you back when they reach a human. Saved me literally hours of waiting on hold. Check out how it works: https://youtu.be/_kiP6q8DX5c When my refund got applied to some mystery debt, I was able to talk to an IRS agent who explained it was actually from an adjustment they made to my 2021 return. Turns out I had claimed a credit I wasn't eligible for, and they'd been sending notices to my old address for a year!

I was totally skeptical about that Claimyr service when I commented earlier, but I was desperate after trying to reach the IRS for days about my offset refund. Holy crap, it actually worked! I got a call back in about 45 minutes saying they had an IRS agent on the line. The agent told me my refund had been applied to a tax debt from 2020 when I apparently didn't report some unemployment income correctly during the pandemic. She explained exactly what happened and even helped me set up a payment plan for the remaining balance. Problem solved in one phone call instead of days of frustration. Never would have gotten this resolved without actually speaking to someone.

Make sure to request an Account Transcript from the IRS for the year they claim you have a debt. You can get this online at IRS.gov/transcripts. This will show any assessments, penalties, or adjustments they've made. Also, if this debt is from many years ago, there's a chance it could be outside the collection statute of limitations (usually 10 years). If that's the case, you might be able to get your refund back.

This happened to me last year! Check if the debt might be something completely unrelated to taxes. The Treasury Offset Program doesn't just collect for IRS - they also collect for student loans, child support, state taxes, etc. In my case, they took my federal refund for an unpaid state tax bill I didn't know about (moved states and mail forwarding expired). Might be worth checking with your state tax agency too.