tax refund offset

Losing Your Income Tax Refund For Defaulted Student Loans

Under federal law, the U.S. Department of Education can request that the Internal Revenue Service take your tax refund for repayment of your defaulted federal student loans.

The U.S. Department of Education is required to give you prior notice of the proposed offset and an opportunity to review loan/grant records, to demonstrate why the loan/grant is not in default or is not enforceable, and to avoid offset by arranging to repay the loan/grant. Notices are sent to you using the best address available to the Department, from all legally available resources, including the most recent address used by you in your most recent federal tax return.

The notice contains deadlines. If you elect the opportunities in the notice after the deadline passes, offset will not be delayed until resolution of your objections.

Federal tax refunds payable to joint filing couples are subject to offset, but that portion of the refund owed to the non-debtor spouse can be recovered by that individual by filing an “injured spouse” claim with the IRS.

On today’s episode, Gene and Jay dive into this subject more deeply. Take some notes so you can be sure to protect yourself.

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