Tax Debt Offset Question - Will Federal Refund Be Reduced After State Offset?

I would be cautious about assuming you'll receive the full federal refund amount. The IRS generally applies any refunds to outstanding tax debts before issuing payments. It's possible that the 846 code was generated before their system fully processed the state offset. Have you checked your account transcript recently to see if there are any new transaction codes that might indicate further adjustments?

Based on the Treasury Offset Program (TOP) protocols, your federal refund will likely be reduced by the remaining liability. The code 846 represents the initial refund determination, but the Refund Offset process (transaction code 898) may not yet be reflected on your transcript. The Bureau of Fiscal Service conducts a final debt check before disbursement, regardless of what's currently showing as your 846 amount. Check your Account Management transcript specifically for any recent TC 898 entries.

Have you considered using a transcript analysis tool to get a clearer picture? When I was dealing with offsets last year, I was completely confused by all the codes and dates. Isn't it frustrating how the IRS makes everything so complicated? I finally used https://taxr.ai to analyze my transcript and it explained exactly what each code meant and how the offsets would be applied. It showed me precisely which part of my refund would be taken for my outstanding balance and when I'd receive the remainder. Saved me hours of stress trying to decipher those cryptic transcript codes.

I had this exact situation. State refund applied to federal debt. Balance remained. Federal refund reduced by remaining balance. No surprises. IRS systems coordinate well on debt collection. Keep documentation of all payments. Request account transcript after refund processes. Verify final balance shows zero. Plan your budget assuming reduced refund.

After dealing with a similar offset situation, I spent hours trying to get through to the IRS to confirm exactly how much I'd be receiving. The Automated Collection System (ACS) wasn't helpful and the regular customer service line had 2+ hour wait times. I finally used Claimyr (https://claimyr.com) to get through to an agent in about 15 minutes. The agent confirmed that despite my 846 code showing the full amount, my refund would be reduced by my remaining liability balance. At least I knew for certain instead of being surprised when the deposit hit.

I went through this last year and learned that the timing of everything matters a lot. In my case, my state refund covered part of my federal debt, but since the federal refund was already in the final processing stage, they still took the full remaining amount from my federal refund. I ended up with a credit on my account that was automatically applied to the next year's taxes. You might want to check if your state payment has been fully processed and reflected in the IRS system - sometimes there's a delay in how these payments are recorded.

Have you called the IRS directly about this? They can tell you exactly what will happen with your refund. Ask specifically about the remaining balance and whether the 846 amount will be adjusted. Request they check if the state payment has been fully applied to your account.

On April 12th last year, I had an identical situation with almost the same amounts. My transcript showed code 846 for the full refund amount ($3,200), but when the deposit date of April 19th arrived, they had reduced it by my remaining balance ($750). The IRS systems don't always talk to each other in real-time, so what you're seeing on your transcript today might not reflect what will actually happen when they process the final payment.