Will ESD overpayment take my portion of joint tax return? Just filed pandemic waiver
I'm so stressed about our tax situation this year! My husband received an ESD overpayment notice for $8,700 about 8 months ago. We think it's completely unfair - he reported everything correctly during the layoff period, but they're claiming he wasn't eligible for some weeks. We just submitted the pandemic overpayment waiver last week (they said review starts in 3-4 months). The big problem: We know ESD is going to intercept his tax refund through Treasury Offset. But this is our first year filing jointly as a married couple, and I'm expecting about $2,300 back on my portion. Will ESD take MY part of the refund too? Can we still file jointly without me losing my refund? And if the waiver gets approved later, does anyone know if they'll return the intercepted tax refund? We're considering filing separately just to protect my refund, but we'd lose some tax benefits. Any advice from someone who's dealt with this ESD/tax nightmare??
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Miguel Herrera
Unfortunately, if you file jointly, the entire refund is subject to offset for the ESD overpayment. The IRS doesn't distinguish between "your portion" and "his portion" - it's treated as one joint refund. Filing separately is your only protection if you want to keep your refund safe from the offset.
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Ava Thompson
•That's what I was afraid of. Do you know if we'll get the money back if the pandemic waiver is approved? It seems so unfair to lose my refund for his alleged overpayment that might be waived anyway!
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Zainab Ali
u should definately file seperate!!! my sister had this EXACT problem last year and she lost her whole refund even tho the overpayment wasnt even her fault!!! the govt doesnt care whos money is whos when ur married
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Ava Thompson
•Oh no, that's terrible! Did your sister ever get her money back? We're really counting on that refund for some car repairs.
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Zainab Ali
•nope she never got it back. they kept saying its "processing" but its been like 14 months now lol
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Connor Murphy
Tax professional here. You have a few options, but none are perfect: 1. File separately to protect your refund. Yes, you may lose some tax benefits like certain credits and deduction amounts. 2. File jointly but file IRS Form 8379 (Injured Spouse Allocation) with your return. This form tells the IRS to allocate the joint refund between you and your spouse and may protect your portion from offset. However, there's no guarantee with ESD debts, and it takes the IRS 8-14 weeks to process these claims. 3. If your pandemic waiver is approved, ESD should refund any money they intercepted from tax refunds. But there's no timeline guarantee, and it could take months. The safest option is probably filing separately this year if protecting your refund is the priority.
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Ava Thompson
•Thank you! I didn't know about that Injured Spouse form. We might try that route. Do you know approximately how much we'd lose in tax benefits by filing separately? We both have pretty straightforward W-2 income, no investments or anything fancy.
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Connor Murphy
•It really depends on your specific situation - income levels, deductions, credits, etc. Generally, couples with disparate incomes lose more by filing separately. You might lose access to child tax credits, earned income credit, education credits, and get reduced standard deductions. I'd recommend running your taxes both ways (jointly and separately) to see the difference before deciding. Most tax software makes this comparison easy.
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Yara Nassar
We went through this last year!! Filed the injured spouse form and STILL lost our refund to my husband's ESD overpayment. It was a nightmare trying to get anyone on the phone at ESD to explain what was happening.
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StarGazer101
•If you're struggling to reach someone at ESD about offset refunds or overpayments, try using Claimyr (claimyr.com). I was in the same position and spent weeks trying to get through. Claimyr got me connected to an actual ESD agent in about 30 minutes. They have a video showing how it works: https://youtu.be/7DieNd3C7zQ?si=26TzE_zGms-DODN3. Saved me so much frustration when dealing with my overpayment issue.
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Yara Nassar
•thanks for the tip! I've seriously never been able to get through to a real person there
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Keisha Jackson
The ESD overpayment system is complete GARBAGE!!! They create these so-called "overpayments" because of THEIR errors and then take years to review waivers while keeping your money hostage!!! I've been fighting with them for TWO YEARS over a $5,200 overpayment that was THEIR MISTAKE!!! YOUR BEST BET: File separately! Don't trust the waiver system - it's designed to delay and deny. Even if approved, they take FOREVER to refund anything. My cousin got approved last June and still hasn't seen a dime of his refund they took!
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Ava Thompson
•Wow, that's so discouraging. Did you ever try appealing to the Office of Administrative Hearings? I've heard they sometimes overturn ESD decisions.
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Keisha Jackson
•YES! I had a hearing with OAH and the judge actually ruled in my favor!!! But then ESD APPEALED THE JUDGE'S DECISION to the Commissioner's Review Office!!! Can you believe that?? So I'm STILL waiting, 7 more months later!!! The system is deliberately designed to wear you down until you give up!
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Miguel Herrera
One important thing to note - if the pandemic waiver is approved, ESD should return any money they've intercepted from tax refunds. But the timeline is unpredictable. I've seen it take anywhere from 2-8 months after waiver approval for refunds to be processed. Make sure you keep documentation of everything, including your tax returns and any communication from ESD about the waiver.
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Paolo Romano
•This. Documentation is key. My brother-in-law had his refund taken last year for an ESD overpayment, got the waiver approved in August, but had to call multiple times with proof of the offset before they finally refunded it in December.
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Ava Thompson
Thank you everyone for the advice! We've decided to file separately this year to protect my refund, even though it'll cost us some tax benefits. We'll keep pursuing the pandemic waiver for his overpayment, but at least this way we'll have my refund for our immediate needs. I'm documenting EVERYTHING in case we need to fight for his refund later. This system is so frustrating!
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Miguel Herrera
•Smart decision! Make sure you both carefully check your filing status on each return - they need to match (both filing as 'married filing separately'). And remember you'll each need to either both itemize deductions or both take the standard deduction when using this filing status.
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Ava Thompson
•Thanks for the tip! I didn't realize we both had to make the same choice about itemizing. This whole situation is so much more complicated than it needs to be.
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