While tax season can be stressful, tax refunds can be a boon for many filers. However, there are a few reasons as to why the IRS could conceivably seize your tax return. Check out the list below to see if you could be in danger of losing your return.
- Student loan default: student loans are virtually inescapable–which is in part why their interest rates are better than most other loans–and defaulting on one is a sure way to lose your tax return. The good news is that federal student aid lenders are notably lenient on repayment schedules: if you encounter financial hardships, simply give them a call to prevent a tax refund seizure.
- Unpaid tax debt: two things are certain, death and taxes. Accordingly, failure to pay taxes from previous years will prompt the IRS to withhold your return, regardless if the debt is old or recent. It’s also worth noting that the IRS could seize your return for either state or federal taxes owed.
- Bankruptcy: Under Chapter 7 bankruptcy, filers could lose their refunds, but are able to exempt some of their tax refund from seizure. However, under Chapter 13 bankruptcy, a trustee can request a seizure of your entire tax refund to be applied to your debts. If you filed for bankruptcy and are worried about losing your refund you should contact your attorney or trustee for clarification.
- Unpaid child support: both federal and state agencies can seize a portion of – of your entire – tax refund for outstanding child support debts. Even after your child turns 18, if you are delinquent on past child support payments your return could be seized.
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