If I'm on an IRS Payment Plan, Will They Still Take My Refund?
So my husband and I owe the IRS from 2022 (his business income issue) and we set up a payment plan last November. We've been making the monthly payments on time... but I'm wondering what happens with our 2023 tax refund? Will they automatically take it to pay down the balance even though we're already in a payment agreement? I'm not sure if we should even bother filing early or if we should wait... This is our first time dealing with this kind of situation since getting married. Any advice?
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Kelsey Chin
Yes, they will take your refund. Being on a payment plan doesn't stop the Treasury Offset Program. Your entire refund will be applied to your outstanding tax debt regardless of your payment plan status. This is standard procedure and explicitly stated in the terms of your installment agreement. File as soon as you have all your documents to avoid penalties for late filing, but expect any refund to be applied to your existing balance.
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Norah Quay
Does this apply even if the payment plan is for a business tax debt but the refund is from a joint personal return? I'm in a similar situation but my accountant told me something different about keeping them separate.
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Leo McDonald
Thank you for this clear answer! I was hoping there might be some exception since we're making our payments on time... Do you know if they at least notify you before taking the refund? Or does it just disappear?
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Jessica Nolan
I went through this exact situation last year. Here's what happened: 1. We filed our return expecting a $3,200 refund 2. About 3 weeks later we got a letter saying our refund was applied to our outstanding balance 3. Our monthly payment amount didn't change, but the number of remaining payments decreased 4. We had to manually recalculate our remaining balance I was a bit worried about the whole thing, but it actually helped us pay down the debt faster. The one thing I'd suggest is to make sure you keep track of the offset amount yourself, as the IRS payment plan portal doesn't always update immediately.
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Angelina Farar
This is really helpful, thank you for sharing your experience. I guess it makes sense that they'd apply it to the balance, even though it's a bit disappointing. Did you find that the letter clearly explained everything, or was it confusing?
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Sebastián Stevens
Did the offset affect your payment plan terms at all? I've heard conflicting information about whether having a refund taken can sometimes trigger a review of your payment plan amount. Did your monthly payment stay exactly the same?
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Bethany Groves
Yep, my refund got gobbled up faster than pizza at a college party 🍕 Had a $2,400 refund coming last year while on a payment plan for 2021 taxes. Checked WMR obsessively for weeks only to get that lovely "your refund has been applied to a past due obligation" message. The silver lining? It knocked almost 6 months off my payment timeline! One weird thing though - the payment plan website didn't reflect the new balance for almost 2 months, so I was a bit confused about how much I still owed.
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KingKongZilla
Isn't it strange how their systems don't talk to each other? I wonder if calling them would have helped get the balance updated faster? When I had a similar situation, I ended up making an extra payment that I didn't need to because their system showed the wrong amount.
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Rebecca Johnston
According to the IRS website, refund offsets are automatic while you're in a payment plan. I was in this situation last year and wanted to confirm exactly what was happening with my refund. After trying the regular IRS number for days (always busy), I used Claimyr (https://claimyr.com) to get through to an agent in about 15 minutes. The agent confirmed my refund had been applied to my outstanding balance and updated my records to show the new payoff amount. Definitely worth it to get clarity instead of wondering for weeks what happened to my refund.
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Nathan Dell
Did you really need to pay for a service just to talk to the IRS? I've had success calling right when they open or using the automated system to check my balance. Seems unnecessary to spend money when you're already trying to pay down debt.
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Maya Jackson
I've been trying to call the IRS for exactly 9 days now about my offset refund. Did Claimyr actually work that quickly? Was the agent able to give you specific information about how much longer your payment plan would last after the refund was applied?
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Tristan Carpenter
Be careful about assuming your refund will be properly applied. I had a payment plan last year, and my $1,800 refund was taken as expected. However, the IRS didn't properly credit it to my account for almost 3 months. I kept making my regular payments, but the online system showed I was behind. Eventually got a notice threatening to terminate my installment agreement. Had to send in proof of the offset and make several calls to get it fixed. Just because they take your refund doesn't mean they'll handle it correctly.
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Amaya Watson
Has anyone tried adjusting their withholding instead of getting a refund? I'm wondering if it would be better for the OP to update their W-4 to have less tax withheld throughout the year, then use that extra money in each paycheck to make larger payments on the installment plan. Wouldn't that give you more control rather than waiting for a refund that will be taken anyway?
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Grant Vikers
Just so you're aware of the timeline: If you file electronically by March 1, 2024, and are due a refund, the IRS will process the offset by approximately March 15-22. You'll receive a notice dated around March 25 explaining the offset. Your payment plan balance will typically update in their system by April 15. Make sure you continue your regular monthly payments regardless of the offset - missing even one payment can void your entire installment agreement and trigger collection actions.
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Anthony Young
I'm currently in a similar situation and have been researching this extensively. One thing I haven't seen mentioned yet is that you should check if you have any other federal debts (student loans, child support, etc.) that might also be eligible for offset. The Treasury Offset Program prioritizes different types of debts, so if you have multiple federal obligations, your refund might be split between them rather than going entirely to your IRS debt. Also, if you're married filing jointly, make sure both spouses are aware that the entire refund will be applied to the debt, even if only one spouse is responsible for the original tax liability. You might want to consider filing separately next year to protect the innocent spouse's portion of any refund.
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