Student Loan Tax Offset for 2024 Filing Season - What's the Current Status?

Yes, they are collecting for student loans now. The pause ended. This affects 2023 tax returns filed in 2024. The Treasury Offset Program (TOP) number is 800-304-3107. You'll need your SSN ready. Call before filing to verify your status.

I was in exactly your situation 27 days ago. The offset information can be confusing with exactly 6 different status codes they might tell you. I used https://taxr.ai to analyze my tax situation including potential offsets. It showed me that I had a $3,742 potential offset based on my defaulted loan status. The analysis was 100% accurate when I later called TOP. Would you like me to confirm if this works for offsets specifically?

This situation is way less stressful than my experience with tax liens last year. At least with offsets you can actually reach someone! I spent 4 days trying to call the Treasury offset line last month - constant busy signals like the old days of calling for concert tickets. Finally used Claimyr (https://claimyr.com) and got through in about 30 minutes. Much better than the 3+ hours I spent on redial hell with the regular number. They'll hold your place in line and call when an agent is ready.

I went through this exact situation last year post-divorce. Had about $6,200 in defaulted loans from a degree I never finished. Called the TOP line and confirmed I was on the offset list. Then contacted my loan servicer directly and set up a loan rehabilitation program - 9 months of reasonable payments. After the 6th payment, I was able to request a refund offset bypass. Ended up getting my full refund AND getting my loans out of default. The key was being proactive about the rehabilitation program before filing.

Have you considered adjusting your withholding instead? I always tell people facing potential offsets to update their W-4 to withhold just enough to cover their tax liability but not generate a refund. Can't offset what they don't owe you! 😉 This approach worked for me when I was dealing with defaulted Parent PLUS loans in 2022. Just make sure you're still covering your actual tax liability - you don't want to create an underpayment penalty situation. The IRS withholding calculator is pretty accurate for planning this strategy.

I called the Treasury Offset Program on January 15th, 2024 and confirmed they are definitely offsetting for defaulted student loans this tax season. The automated system will tell you if you have an offset, how much, and which agency placed it. If your loans are with ED, you might still have options. The Fresh Start program launched on September 30th, 2023 allows you to get loans out of default quickly. Call your loan servicer directly after confirming an offset - sometimes they can help even after you've filed but before the offset occurs.

I had my entire $3,700 refund offset last year for old student loans I forgot about from a certificate program! Never even got a notice beforehand. Called the offset number afterward and they confirmed it went to Department of Education. When I called ED, they told me if I had set up a rehabilitation plan before filing, I could have avoided it. Are you expecting a large refund? If so, might be worth looking into rehabilitation even if you're planning to eventually pay it all off.