Help With Garnishment of Tax Refund

If you expect a tax refund but you are worried about a garnishment it can be stressful. Federal law only allows state and federal government agencies (not individual or private creditors) to take their repayment as payment of the debt. However, when you send the refund to your bank account, these rules will no longer apply. Depending on the laws of your state, private creditors may have access to these funds. So now we will talk about getting help with garnishment of tax refund.

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Help With Garnishment of Tax Refund 1

Who can do my tax refund?

There are four types of debt that the federal government will withhold your tax refund or send to one of your creditors. These debts include federal debts owed previously, state income taxes, child support payments and amounts owed by federal agencies or other states, such as federal student loans or medical debts to state hospitals that you have not paid. If you have this type of outstanding debt, the Ministry of Finance can withhold all or part of the income tax reimbursement to help you pay the amount due.


Treasury Compensation Program

The Treasury Compensation Program (TOP) is administered by the United States Financial Administration Service (FMS). It allows federal and state government agencies to collect outstanding debts due to them by accumulating their debts, or offsetting them, with their tax refund.
Often, government agencies generate federal income tax refunds, since the most common federal payments are.  Private creditors, such as credit card companies, do not have access to your tax refund. In addition, there are only certain types of government debts eligible for TOP. These include child support payments ordered by the court, outstanding debts with federal agencies other than the Internal Revenue Service, prior state taxes, and any unemployment compensation you have to pay back.


IRS Priority

Before any federal agency or other state can take advantage of your tax refund, you must be up to date with your federal tax payments. This is because the outstanding taxes owed to the IRS must always be paid first. For example, if you have taxes for the previous year, but if you expect a tax refund in the current year, the federal government does not consider it to be an overpayment accessed by non-IRS government agencies. In this case the IRS applies the current tax refund on your previous balance of taxes due. In other words the IRS pays first before you provide your tax refunds for other government agencies to heal.


Debts When Filing a Tax Return

The debts eligible to file a tax return are debts with the government. Therefore, debts with individuals or companies are not eligible to offset tax returns. Any government agency can request compensation from your tax refund to help you collect the amounts owed. Common debts used for compensation include federal loans.  But not private loans child support with prior maturity excessive payment of unemployment insurance. As well as fees and fines derived from those debts.


Avoid Garnishing

If you believe that you have recently owed balances to government agencies.  The best way to avoid your federal tax refund is to contact these agencies.  Before filing your tax return to make payment arrangements. While your refund can still be collected in most cases. You do not have to pay the full debt before filing your tax return.  It is enough to establish a payment plan to avoid avoiding reimbursement of your federal taxes.


Child Support Payment

If you overpay your income taxes and have an eligible amount for a refund.  The state agency that governs your child support order makes the first claim for that refund.  If your support payments are pending. The state can continue to collect tax refunds each year until all payment obligations for child payments are met.


Before you go, I hope this article help with garnishment of tax refund is helpful for you. If you need additional help, speak to one of our recommended tax experts today.


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