Federal Tax Refunds

• As complicated as people assume income taxes are, it really boils down to a simple calculation. You figure out how much you made and how much you're responsible to pay in taxes based on your tax bracket. Then you compare the amount you've already paid through withholding and the amount you owe. If the amount you owe is greater, you pay the difference to the government. If the amount you owe is less than what you've already paid, you get a tax refund.
  
  

Refund Offsets

• Just because you're due a refund doesn't mean you actually receive it. A refund offset occurs when your tax refund is intercepted to pay a past due debt. The U.S. Treasury's Financial Management Service monitors tax returns to locate debtors whose wages are being garnished. Instead of receiving your refund, you receive a notice from the U.S. Treasury explaining what happened. Anything above and beyond your debt is sent back to you.
  
  

What Types of Garnishments Can Affect a Refund?

• Not all debt can affect your tax refund. The FMS only garnishes your tax refund for certain types of debt. State income tax obligations and state unemployment compensation owed can both be deducted from your refund. It can also occur for money owed to a federal agency, such as government student loans. However, the most common type of debt that results in garnishment is delinquent child support.
  
  

The Notice

• If the FMS intercepts your refund, you receive a notice by mail. It explains the details of the garnishment, including listing the total amount of your tax refund. It lists the debt paid with your tax refund and the amount left over, if any. It also lists the government agency responsible for the interception and the contact information so you can discuss the debt directly with them. For example, if it was garnishment for student loans, the U.S. Department of Education would be listed.