Can My Tax Refund be Garnished?

Taxpayer looks at a letter from the TOP

The Treasury Offset Program (TOP) identifies people and businesses who have overdue debts and uses money that federal agencies are paying, such as a federal income tax refund, to offset those debts. 

**Some federal and state agencies have stopped collection actions during the COVID-19 pandemic. For more information about this, visit the TOP website. 

Can the government take your tax refund? 

The U.S. government may take your tax refund as payment if you have overdue debt owed to federal or state government agencies. The TOP helps these agencies collect what they are owed by holding back money from a federal payment to cover the debt. A tax refund is one type of federal payment that many people receive. 

Why was my tax refund lower than expected? 

Your refund may have been lower than expected if you owe money to a federal or state agency and your payments are overdue. For instance, if you owe taxes for a prior year, but you’re expecting a tax refund in the current year, the IRS could apply your current tax refund to your past-due tax balance.  

Other types of overdue debt that could result in garnishing your tax refund include: 

  1. Court-ordered child support payments 
  2. Federal student loans*  
  3. Unemployment compensation you are required to pay back 
  4. Other outstanding debts with federal agencies

Was your 2020 tax refund lower than expected? If you claimed the Recovery Rebate Credit on your 2020 tax return and received your stimulus check after you filed, the IRS will automatically adjust your refund accordingly. This may explain why your refund amount was lower than expected. In this case, the IRS will notify you by letter explaining the adjustment.

Can my Recovery Rebate Credit be garnished? 

If you are eligible for the Refund Recovery Credit on your 2020 tax return but you have overdue payments to a government agency, your refund may be reduced to cover those delinquent debts. For more information: see Recovery Rebate Credit and the TOP. 

*The stimulus payments delivered in response to the COVID-19 pandemic are protected from garnishment if you owe federal or state debt. In addition, collection activities are paused for most federal student loans until Sept. 30, 2021. 

How do I know if my refund will be garnished? 

When you have outstanding debt, the agency you owe must contact you by letter 60 days before they send the debt to the TOP. The letter will include information about making payments, as well as how to contact the agency if you have questions.

Will my refund be garnished if my spouse owes money? 

If you and your spouse are filing jointly, your shared refund can be garnished to offset their delinquent debt. You’ll need to file IRS Form 8379, Injured Spouse Allocation Form, to get back your share of the refund. 

Can my landlord garnish my tax refund? 

No. Private individuals and creditors such as credit card companies don’t have access to your federal tax refund. However, depending on the laws in your state, private creditors may be able to access your state refund.