Unless you are significantly behind on your loan payments, yes you will get your tax refund.
Collection activities are currently paused for all federal student loans through September 2024, which should protect your 2022 and 2023 federal and state tax refunds.
Can I get a refund if I already received forgiveness or paid off my loan? No. If you have already received forgiveness or paid off your loans, you are not eligible for a refund of prior payments.
BFS will send you a notice if an offset occurs. The notice will reflect the original refund amount, your offset amount, the agency receiving the payment, and the address and telephone number of the agency. BFS will notify the IRS of the amount taken from your refund once your refund date has passed.
If you owe a federal tax debt from a prior tax year, a debt to another federal agency, or certain debts under state law, the IRS may keep (offset) some or all your tax refund to pay your debt. In fact, in many situations the IRS is legally required to forward your refund to pay the debt.
Your tax return may show you're due a refund from the IRS. However, if you owe a federal tax debt from a prior tax year, or a debt to another federal agency, or certain debts under state law, the IRS may keep (offset) some or all your tax refund to pay your debt.
Once you've requested a refund through your online account, it'll be processed in 28 days and the money will get paid into your bank account – so make sure your details are correct.
The Treasury Department can only intercept your refund after your loans officially enter default. If you start missing payments in early 2025, your loans won't be in default until later in the year, so your tax refund would be safe. However, any refund processed after your default date in 2025 could be intercepted.
Once you have confirmed it is not a scam, you can take steps to try to stop the tax refund offset by requesting a review. To request a review, contact your loan servicer. If you do not know who your loan servicer is, you can also contact the Department of Education Default Resolution Group.
Will Treasury offset, such as withholding of tax refunds and Social Security benefits, resume after the student loan payment pause ends? No. If you're eligible for the Fresh Start for defaulted loans, any collections on those defaulted loans, including through Treasury offset, will stay paused through Sept. 30, 2024.
Can the IRS take my refund for student loans if I'm approved for a deferment? Share: If your student loan is in deferment, the IRS won't take your refund. The IRS will only take your refund if you're delinquent with your student loans to offset debt.
Consequences of Default
The entire unpaid balance of your loan and any interest you owe becomes immediately due (this is called "acceleration"). Your tax refunds and federal benefit payments may be withheld and applied toward repayment of your defaulted loan (this is called “Treasury offset”).
Student Loan Interest Deduction
You can take a tax deduction for the interest paid on student loans that you took out for yourself, your spouse, or your dependent. This benefit applies to all loans (not just federal student loans) used to pay for higher education expenses. The maximum deduction is $2,500 a year.
If you default on a federal student loan, then your wages or bank accounts can be garnished without a court order or judgment. The maximum that can be withheld for federal student loan garnishment is 15% of your disposable income.
Usually only the state and federal governments are able to take your tax refund, therefore you'll probably get your refund if your student loan debt isn't: With the state or federal government. Part of a federally insured student loan program.
The federal StudentAid website explains that tax refund garnishments were paused only through September 30, 2024. That leaves the door open for your next tax return to be taken by the U.S. Department of Education to offset your outstanding federal student loan payments.
You earned below the threshold
Get a refund if your annual income for a previous tax year was below the repayment threshold.
If you qualify for a refund, expect to receive it within about two months of the loan forgiveness.
Yes, federal student loans may be forgiven after 20 years under certain circumstances. But only certain types of loans are eligible for forgiveness, and you must be enrolled in a qualifying repayment plan. You'll also need to stay out of default on your loans.
You can check online or contact your financial aid office to see the status of your financial aid refund disbursement.
If you owe back taxes, the IRS will take all your refunds to pay your tax bill, until it's paid off. The IRS will take your refund even if you're in a payment plan (called an installment agreement).
The Bureau of Fiscal Services will send you a notice if there's a refund offset. The offset notice will show: Original refund amount. Your refund offset amount.
The IRS may agree that you have a financial hardship (economic hardship) if you can show that you cannot pay or can barely pay your basic living expenses. For the IRS to determine you are in a hardship situation, the IRS will use its collection financial standards to determine allowable basic living expenses.