The IRS can take your refund to pay debts you owe to the federal government, state governments, or private creditors
When you file your tax return and expect a refund, the IRS may intercept that money before it reaches you. This process is called offset or levy. The IRS does not keep the money — it sends it to pay off debts in a specific order: federal taxes you owe, state income taxes, child support or spousal support, federal student loans, and other debts referred to the federal government for collection.
You will not receive a refund check or direct deposit. Instead, you will get a notice in the mail explaining what happened and which debt was paid. The notice arrives weeks after you file, which is why many people discover the offset only when they realize their refund never came.
The most common reason for offset is unpaid federal income tax from a previous year. The second most common is a state tax debt. Child support arrears and federal student loan defaults account for a significant share of offsets as well.
Key Takeaways
- The IRS offsets refunds to pay federal taxes owed, state taxes owed, child support arrears, federal student loans in default, and other debts referred to the federal government.
- You will receive a notice in the mail explaining which debt was paid and how much was taken, usually within two to four weeks after filing.
- You can contact the agency holding the debt to negotiate a payment plan, request a hardship exemption, or dispute the debt if you believe it is wrong.
- If you are married and filed jointly, your spouse may be able to file an Injured Spouse claim to recover their portion of the refund.
- Offsets do not appear on your credit report, but the underlying debt will continue to accrue interest and penalties until you pay it.
How to find out which debt caused the offset
The IRS sends a notice called the Notice of Offset (or sometimes a Notice of Federal Offset) to your mailing address. This notice tells you the amount taken, the type of debt, and which agency is holding it. Read this notice carefully — it is your proof that the offset happened and your starting point for resolving it.
If you have not received a notice within four weeks of filing, you can call the IRS at 1-800-829-1040 and provide your Social Security number and filing status. The IRS can tell you whether an offset is pending or has already been processed. Have your tax return information ready when you call.
If the debt is federal income tax, the IRS will tell you the tax year and the amount owed. If it is a state tax debt, child support, or a federal student loan, the notice will name the agency holding the debt and provide a phone number to contact them directly.
Unpaid federal income tax from a previous year
If you owe federal income tax from 2021, 2022, or earlier, the IRS will offset your current refund to pay that debt. The IRS does not need your permission to do this — offset is automatic when you file a return and have a refund due.
To stop future offsets, you must pay the debt in full or set up a payment plan. You can pay online at IRS.gov using the Online Payment Agreement tool, or call 1-800-829-1040 to arrange an installment plan over time. If you cannot pay the full amount, the IRS may place you on a Currently Not Collectible status temporarily, which pauses collection action but does not erase the debt.
The IRS charges interest and penalties on unpaid tax. The interest rate is set quarterly and is currently around 8 percent per year. Penalties add 0.5 percent per month of the unpaid amount. These charges continue to grow until the debt is paid, so the longer you wait, the more you will owe.
State income tax debt
If you owe state income tax, your state can refer the debt to the federal government for offset. The state tax authority will have already sent you notices before this happens — typically at least two notices over several months. Once the debt is referred, the IRS will intercept your federal refund.
To resolve this, contact your state's tax authority directly. The notice you received from the IRS will include the state's phone number. You can pay the debt in full, set up a payment plan with the state, or request a hardship review if you cannot pay. Some states offer payment plans that spread the debt over 12 to 36 months.
State tax debts also accrue interest and penalties. The rates vary by state but are typically similar to federal rates. Paying the debt stops the interest from growing and prevents future offsets.
Child support or spousal support arrears
If you owe child support or spousal support, the state child support enforcement agency can refer your case to the federal offset program. This is one of the highest-priority debts — the IRS will offset your refund even if you are on a payment plan with the support enforcement agency.
Contact your state's child support enforcement office (listed on your offset notice) to find out the exact amount owed and your options. You can pay the full amount, request a modification of your support order if your income has changed, or ask about a payment plan. Some states allow you to request a hearing to dispute the amount if you believe it is calculated incorrectly.
If you are behind on support, the enforcement agency may also suspend your driver's license, professional license, or passport. Paying the debt or reaching a payment plan can stop these actions.
Federal student loan default
If you have a federal student loan in default, the Department of Education can refer it to the IRS for offset. This typically happens after you have missed payments for nine months or longer and the loan has been declared in default.
To resolve this, you can contact your loan servicer or the Department of Education's Federal Student Aid office at 1-800-4-FED-AID. You have several options: pay the full amount owed, request a rehabilitation plan (usually nine on-time payments over ten months), or request a consolidation loan that combines your defaulted loans with other federal loans into a new repayment plan.
Rehabilitation or consolidation will stop the offset and restore your may be able to access for future federal student aid. Once you rehabilitate your loan, you can also request a refund of the amount that was offset, though this is not may provide.
What to do if you believe the offset is wrong
If you do not recognize the debt or believe the amount is incorrect, you have the right to dispute it. The process depends on which agency is holding the debt.
For federal income tax, contact the IRS at 1-800-829-1040 and ask to speak with a representative about your account. Bring documentation showing that you paid the tax, such as cancelled checks or payment confirmations. If the IRS made an error, they can reverse the offset and send you the refund.
For state tax, child support, or student loans, contact the agency listed on your offset notice and request a hearing or review. You will need to provide evidence that the debt is wrong — for example, proof of payment, a corrected court order, or documentation that the debt was discharged in bankruptcy. The agency will review your evidence and notify you of the outcome within 30 to 60 days.
If you believe the debt is correct but you cannot pay it, ask about hardship relief. Some agencies will pause collection or reduce the amount if you can show financial hardship.
Injured Spouse claims for joint filers
If you filed your tax return jointly with your spouse and only one of you owes the debt, your spouse may be able to recover their portion of the refund through an Injured Spouse claim. This applies when your spouse owes federal tax, state tax, child support from a previous relationship, or a federal student loan, but you do not.
To file an Injured Spouse claim, use Form 8379 and mail it to the IRS address listed in the form instructions. You must file within three years of the original offset date. The IRS will review your claim and, if approved, send your spouse's portion of the refund to them.
This process takes 8 to 12 weeks. You will receive a letter from the IRS explaining the decision. If approved, the refund will be sent to your spouse's address on file or deposited into their bank account if they provided direct deposit information.
Frequently Asked Questions
Can the IRS offset my refund for a debt I do not recognize?
The IRS will offset your refund only if the debt is in their system and has been referred by another agency or if you owe federal income tax. If you do not recognize the debt, contact the agency listed on your offset notice and request a review. You have the right to dispute the debt and provide evidence that it is wrong or has been paid.
How long does it take to get my refund back after I pay the debt?
Once you pay the debt in full, future refunds will not be offset. However, the refund that was already taken will not be returned unless you file an Injured Spouse claim or the IRS determines the offset was made in error. If the IRS made a mistake, they can issue a refund within 30 to 60 days.
Will an offset affect my credit score?
The offset itself does not appear on your credit report. However, the underlying debt — unpaid tax, child support, or student loans — will damage your credit if it remains unpaid. Paying the debt or setting up a payment plan will prevent further credit damage and stop future offsets.
Can I prevent an offset if I know I owe money?
No, you cannot prevent an offset once a debt has been referred to the federal government. However, you can contact the agency holding the debt before you file your tax return and set up a payment plan. This will not stop the offset if your refund is already being processed, but it may reduce the amount owed and prevent future offsets.
What happens if I file jointly but only one spouse owes the debt?
The IRS will offset the entire refund to pay the debt, even if only one spouse is responsible. The spouse who does not owe the debt can file Form 8379 (Injured Spouse claim) to recover their portion. This must be filed within three years of the offset date.