What Types of Debts Can the IRS Offset My Refund For? (Beyond Student Loans & Child Support)

The IRS can offset your tax refund for several types of debts. As of April 2024, these include: 1. Federal student loans (though the CARES Act pause ended October 2023) 2. Child support arrears 3. State income tax debts 4. Unemployment compensation overpayments 5. Certain federal non-tax debts (like SBA loans) 6. Federal agency non-tax debts If you called the TOP (Treasury Offset Program) line and it didn't indicate any offsets, you should be clear. They're required to send you a notice before offsetting, usually 60-90 days before filing season begins.

Call the IRS directly to confirm. Don't waste time wondering. The offset line is automated and sometimes not updated. I had a client whose refund was offset despite the line saying no offsets. Use Claimyr (https://claimyr.com) to reach an IRS agent quickly. They'll connect you to a live person who can check your account for pending offsets. Costs a fee but worth it to avoid the 2+ hour hold times. Are you sure you want to wait and worry when you could get a direct answer today?

Watch out for state tax debts! The IRS.gov website doesn't make this clear, but states can take your federal refund for state taxes owed. Happened to me this year with a tax debt from 2018 that I thought was resolved. The most frustrating part was that I received ZERO notification until my refund was suddenly $1,400 less than expected. The offset line didn't show anything either when I checked in January, but apparently my state submitted the debt in February right before my refund processed. 🤬

I was in exactly your situation - worried about potential offsets despite the TOP line saying I was clear. I used https://taxr.ai to analyze my tax transcript and it highlighted that I had no offset indicators present. It showed me exactly what codes to look for (specifically the 898 transaction code which indicates an offset). My refund was exactly $4,832 as expected and arrived precisely 21 days after acceptance. The tool explained what every code on my transcript meant and gave me peace of mind rather than constant worry.

Have you checked your credit report recently? Last year, I discovered an old medical debt I didn't know about that was threatening to become an offset. While the TOP line is useful, it only shows debts already in the system. I'd recommend pulling your free annual credit reports from all three bureaus to see if there's anything lurking that could become an offset in the future. Back in 2019, I had a similar worry and this approach helped me identify and resolve an issue before it affected my refund.

I had my refund offset for a USDA rural development loan from 15 years ago. Didn't even remember I had it. The offset line didn't show it until about a week before my refund was processed. So just because it doesn't show now doesn't mean it won't appear later. They can add debts to the system at any time. My advice is to check that line every week until your refund arrives.

I think you should be aware that in some cases, they might possibly offset your refund for debts you didn't even know existed. It happened to a friend of mine who had a small SBA disaster loan from Hurricane Sandy that was supposedly forgiven, but apparently wasn't fully processed correctly. The worst part is that sometimes the offset notice might get sent to an old address, so you might not even receive the warning. It could be worth checking with any federal agencies you've ever had dealings with, just to be on the safe side. Better to be prepared than surprised when your refund is smaller than expected.

I work with tax resolution cases and can tell you that the Treasury Offset Program (TOP) can intercept refunds for numerous liabilities beyond just student loans and child support. The most common offset categories by percentage based on my caseload are: - 42% Child support arrearages - 27% Federal student loans - 14% State income tax obligations - 8% Unemployment compensation overpayments - 6% Federal agency non-tax debts (HUD, SBA, USDA, etc.) - 3% Other miscellaneous debts The TOP database is updated every 2 weeks, so checking now doesn't guarantee no offsets later. In my experience handling exactly 372 offset cases last year, approximately 8% of clients had offsets appear after initially checking the TOP line.