Getting your IRS tax refund can feel like the most wonderful time of the year. If your much-anticipated tax refund doesn’t arrive, though, you may start breaking out in a cold sweat. Sometimes, there may simply be a delay in processing your tax refund. There are times, however, when the IRS may seize your tax refund.
When Can the IRS Keep Your Tax Refund?
There are several circumstances that allow for the IRS to hold tax refunds. If you owe federal income taxes for previous tax years, for example, the IRS can keep your refund, which is called an offset. Your refund can also be seized because of past-due state income taxes.
If you’re wondering “Why did the IRS take my refund?” if you’re not behind on taxes, there are a few other reasons your tax refund may have been kept. For example, if you were paid too much unemployment compensation by your state, your refund can be held to repay that debt. If you owe child or spousal support, your refund may be withheld to pay that support.
Student loans are another reason your income tax refund might be withheld. You must have defaulted on your loans, though, for this to happen. If you’re behind on one or two payments, it typically won’t cause your refund to be withheld. If you’re not sure of the status of your student loans, you can contact your loan servicer to find out.
If you have filed for bankruptcy, all or a portion of your refund may be seized by the court. In the case of a Chapter 13 bankruptcy, bankruptcy trustees can ask the court to seize your entire refund. If you filed a Chapter 7 bankruptcy, a portion of your refund can be seized to pay off your debts. After your bankruptcy has been discharged, the court can no longer seize your refunds.
When to Expect Your IRS Tax Refund
If you filed your taxes early to get a refund, you may have to wait longer than you might expect. Anyone who claims the earned income tax credit will not get a refund before February 15. The IRS will hold your entire refund until that date.
In other circumstances, your tax refund will typically be issued in 21 days or less if you e-filed or in four weeks if you sent in a paper income tax return. There are no guarantees, though. You can check the status of your refund by going to the “Where’s My Refund?” section on the IRS website or by using the IRS2Go mobile application.
If it has been more than 21 days since you’ve e-filed or more than six weeks since you sent in your paper return, you can call the IRS for assistance in finding your refund. You can also walk into a local IRS office.
How to Know if the IRS Will Keep Your Refund
If you’re waiting on a refund and thinking “How will I know if the IRS took my refund?” the answer will be in your mailbox. If there’s a problem with your tax return, if your taxes are being held as an offset or if your refund will be delayed, the IRS must notify you in writing. This is one of your rights as a taxpayer. You have the right to be informed.
If your refund is being seized because you owe federal taxes, you will receive a letter from the IRS explaining why you’re not getting the refund. In some cases, you may receive a letter from the Bureau of the Fiscal Services. The BFS handles seized refunds for other reasons, such as owing back child support or state income tax.
Exceptions to the IRS Keeping Your Refund
There are some circumstances when, though it might feel like the IRS is keeping your refund, it is actually just delayed. In these cases, the IRS is holding your refund rather than keeping it. For example, if you are missing tax returns for previous tax years, the IRS may hold your refund. They may also hold your refund if your check was returned, if there’s a problem with your name or address or if the IRS is reviewing your tax return. The IRS will notify you of the reason for the delay.
You may also qualify for an exception to having your refund held if you filed a joint return, but you are not responsible for the debt. You can file Form 8379, which is called the Injured Spouse Allocation. After the IRS reviews the form, they may refund you your portion of the refund.
When to Contact the IRS About Your Refund
If you are expecting a refund and you haven’t received it within the expected time frame and you haven’t received a written explanation for the delay, you should contact the IRS. If you check the IRS website or mobile app and it says you should have received your refund but you haven’t, you should also contact the IRS. The reason for this is that there have been some cases of people stealing another person’s identity and filing a return in order to steal the refund.
If the IRS records say they’ve sent your refund but you haven’t received it, another possibility is that your bank account information was incorrect and it was deposited to the wrong account. In these circumstances, the IRS recommends contacting your bank or credit union first, and if that isn’t effective, you can file Form 3911 with the IRS to get assistance.
Expediting Your Tax Refund
If your tax refund is being delayed, and that delay is causing you a severe financial difficulty, you may be able to get the refund expedited. To get the refund expedited, you will need to contact the IRS and explain your situation. Typically, they will expedite the request if you are experiencing a dire situation, such as being unable to buy medicine, being unable to pay your mortgage or rent or receiving a shut-off notice for your utilities.
The IRS may also release your taxes due to hardship if your taxes are being held to pay past-due federal taxes. You will need to contact them and explain your circumstances, but they may be willing to issue your refund. They can only release a refund that’s being held for federal taxes, though. If it’s being held for another reason, such as for back child support or to pay state taxes, the IRS can’t release the tax refund due to hardship.
How to Minimize Your Tax Refund
Although it may sound counterintuitive, the best way to avoid having a tax refund held by the IRS is to not have a tax refund in the first place. Although a tax refund may feel like free money, you are actually giving the government a free loan, and you’re taking home less money each paycheck to give them that loan.
To minimize your refund, you should review the Form W-4 you have filed with your employer. On the W-4, you select the number of allowances. The maximum amount of taxes are taken out if you take zero allowances. The more allowances you take, the less money will be taken out of each check.
You can take one allowance for yourself if no one else claims you as a dependent. You can also take one allowance for each dependent, one allowance for your spouse, one allowance if you take the child tax credit or the child and dependent care credit and one allowance if you file as head of household. If you received (or were supposed to receive) a refund and you want to lower the amount of taxes withheld, you should consider increasing your allowance. You can change your Form W-4 at any time.
Getting a Refund on Your 2018 Taxes
The first step in obtaining a refund for your 2018 taxes is to file your income tax forms by the deadline, which is April 15, 2019. You can file for an extension, but that would delay your refund. The earlier you file your tax return, the earlier you will get your refund, although if you take the earned income tax credit your return will be held until mid-February.
The Tax Cuts and Jobs Act, which was passed in December 2017, will also impact your 2018 taxes. For example, if you’ve itemized your deductions in the past, you may opt to take the standard deduction instead since it is significantly higher than in the past. For single filers, the standard deduction is $12,000. If you’re married filing jointly, the standard deduction is $24,000, and if you’re filing as head of household, the standard deduction is $18,000. This increase could potentially increase your refund.
A new Form 1040 is being introduced for the 2018 tax year. It is a shorter form and is designed to replace the current Form 1040, the current Form 1040-A and Form 1040-EZ. Your or your tax preparer will need to accurately complete the new form to get your refund.
If you’re concerned about the question “Will the IRS take my refund?” review your Form W-4 to ensure you have the right amount of allowances. You can figure out the appropriate amount to have withheld by using the IRS withholding calculator, which is available on their website.
If you think you may have a debt that would trigger having your refund seized, you can take steps to resolve the issue. If you owe back child support, for example, take steps to get caught up. If you owe state or federal taxes, make payments to get caught up. Even if you have a payment agreement for federal back taxes, though, your income tax refund can still be seized so your debt can be paid down faster.
Getting a Refund on Your 2017 Taxes
The sooner you file your tax return for your 2017 taxes, which were due on April 17, 2018, the sooner you will receive your refund. An extension extends that due date to October 15, 2018. If you filed by the April 17 deadline and did not receive your return within the expected time frame, you should have received a letter from the IRS or the BFS explaining the reason for the delay.
You can also check the status of your refund by visiting the IRS website or by using the IRS app. If either of those resources indicates you should contact the IRS, then you should get in touch with them as soon as possible.
If you don’t know why your refund was delayed, you should contact the IRS as soon as possible. You can call them or visit a local IRS office. If you have contacted the IRS and you haven’t been able to resolve your tax issue, you can contact the Taxpayer Advocate Service. You should also contact the IRS or the Taxpayer Advocate Service if having your refund withheld is causing you financial difficulties.
- IRS: 2017 Tax Season Refund Frequently Asked Questions
- IRS: Refunds
- IRS: IRS Working on a New Form 1040 for 2019 Tax Season
- TaxAct: How to Avoid a Big Tax Bill or Fine-Tune Your Refund
- Taxpayer Advocate Service: I Don't Have My Refund
- Taxpayer Advocate Service: Expediting a Refund
- Taxpayer Advocate Service: Held or Stopped Refunds
- Taxpayer Advocate Service: The Right to Be Informed
- Taxpayer Advocate Service: Refund Offsets
- Taxpayer Advocate Service: Contact Us
- Money Crashers: 4 Reasons the IRS Can Seize Your Income Tax Refund Money for Debt
- The Motley Fool: 5 Reasons the IRS May Take Away Your Tax Refund
- The Washington Post: Counting on a Tax Refund Next Year? Double-Check Your Withholdings Now
- IRS kicks off 2019 tax-filing season as tax agency reopens; Use IRS.gov to avoid phone delays | Internal Revenue Service
Melinda Hill Sineriz is a freelance writer with over a decade of experience. Her work has appeared on Pocket Sense and Sapling. She specializes in business, personal finance, and career writing. She has worked in insurance sales and financial planning, helping families to manage their money and prepare for the future. Learn more about her and her work at thatmelinda.com.