If I'm on an IRS Payment Plan, Will They Still Take My Refund?

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.

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.

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.

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.

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.

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?

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.

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.

I went through this exact situation two years ago and can confirm what others have said - yes, they will take your refund even with an active payment plan. Here's what I learned that might help you: First, definitely file early once you have all your documents. The offset happens automatically, but filing early means you'll get the notice sooner and can adjust your expectations. Second, keep detailed records of everything. When my $2,100 refund was offset, it took almost 8 weeks for their payment portal to reflect the new balance, and during that time I got confused about how much I still owed. Third, consider this a blessing in disguise - it reduced my payment plan from 48 months to about 30 months, saving me interest in the long run. One tip nobody mentioned: call the IRS about 2-3 weeks after you see "refund applied to past due obligation" on Where's My Refund to confirm they credited it correctly to your specific installment agreement. Sometimes offsets get misapplied, especially if you have multiple tax years involved. Better to catch any errors early than deal with collection notices later. Good luck! The process is stressful but manageable if you stay on top of it.

I'm dealing with this exact situation right now - filed our joint return three weeks ago expecting a $2,800 refund while on a payment plan for 2022 taxes. Just got the dreaded "refund applied to past due obligation" message on Where's My Refund yesterday. While it's disappointing to lose that money we were counting on, I have to admit it's actually kind of a relief to know it's going toward paying down our debt faster. One thing I'd add to all the great advice here: if you use tax software like TurboTax or H&R Block, make sure to update your direct deposit information in their system to remove your bank account for next year. I forgot to do this and got a confusing email from TurboTax saying there was an issue with my refund deposit - took me a while to realize it was because the IRS had already intercepted it. Small thing, but might save someone else a moment of panic! Also echoing what others said about continuing your regular payments - don't assume the offset counts as this month's payment. Keep making those monthly payments exactly as scheduled until you get official confirmation of your new balance.

I'm currently going through this same situation and wanted to share what I've learned so far. Yes, they will definitely take your refund even though you're on a payment plan - the Treasury Offset Program is completely separate from your installment agreement. I filed our 2023 return in early February expecting a $1,900 refund, and it was intercepted about 3 weeks later. Here are a few things I wish I'd known beforehand: 1. The offset happens automatically - you don't get advance warning, just a notice after the fact explaining what happened 2. Your monthly payment amount stays the same, but your total number of payments decreases 3. The IRS systems are slow to update - my online payment portal still showed the old balance for almost 6 weeks after the offset One thing that's been really helpful is keeping a spreadsheet to track my actual balance since their online system lags so much. I subtract each monthly payment and the offset amount to know where I really stand. The good news is that even though it's frustrating to lose that refund money, it does accelerate your payoff timeline significantly. My payment plan went from 42 months down to about 28 months, which will save me quite a bit in interest over time. File your return as soon as you have all your documents - there's no point in waiting since the offset will happen regardless of when you file.