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.
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.
Yes, student loans will take your taxes in 2025, but only under specific circumstances: Your federal student loans must be in default. This means you've missed payments for at least 270 days (about nine months). Only federal student loans are eligible.
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.
Prevent an offset
Pay the full amount listed on the Intent to Offset Federal Payments (FTB 1102). Use the payment coupon included in the letter when you send your check or money order. To make a payment online, visit Payment options .
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).
Student loans can factor into your taxes as the interest is often tax deductible. So, you can reduce your tax bill if you include the amount of interest you've paid during the tax year.
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.
Typically, these refunds are intended to cover school-related expenses such as off-campus housing, supplies or transportation. However, there are also cases in which students have borrowed more than they actually needed, resulting in a refund check. It's important to know that refund checks are not “free” money.
Generally, if you miss payments, your loan is considered delinquent and is reported as such to the national credit reporting agencies. You don't get reported when you're in forbearance. During the on-ramp period (through Sept. 30, 2024), we automatically put your loan in a forbearance for the payments you missed.
The 2024–25 Free Application for Federal Student Aid (FAFSA®) form asks for your (the student's) and your family's 2022 income and tax information. enables submitting a FAFSA form before attending school.
A “Notice of Intent to Offset” is the IRS or BFS official warning of their intent to offset part or all of your federal tax refund and apply it to unsettled debts. A Notice of Intent to Offset will contain several pieces of critical information: The name of the individual taxpayer. The amount of the original tax refund.
You will get a letter before your taxes are taken letting you know that your refund is being taken and giving you information about requesting a hearing to stop the tax refund offset. If you didn't get that letter before your refund was taken, call the Treasury Offset Program at 1-800-304-3107.
Maybe. Under the State Income Tax Levy Program, the IRS can levy (take) your state tax refund to offset back taxes, addressing any tax debt you might owe. If this happens, the state will give you notice of the levy. The IRS will also give a notice, after the levy, offering you the opportunity to appeal the debt offset.
The IRS can delay your tax refund until it completes any audits. This is most common when the IRS is conducting a mail audit on your EITC or ACTC return from a prior year. Normally, you'll receive IRS Letter CP88 indicating that your refund is frozen until the IRS completes the audit.
The student loan tax offset program resumed in 2024. If you have federal student loans in default, your 2025 tax refund may be at risk.
In July 2024, AFT sued MOHELA for a wide range of unlawful practices, including illegally executing a “call deflection” scheme to deny service to borrowers who need help.
Your loan holder can order your employer to withhold up to 15% of your disposable pay to collect your defaulted debt without taking you to court. This withholding (“garnishment”) continues until your defaulted loan is paid in full or removed from default.
If you owe money to a federal or state agency, the federal government may use part or all of your federal tax refund to repay the debt. This is called a tax refund offset. If your tax refund is lower than you calculated, it may be due to a tax refund offset for an unpaid debt such as child support.
Student loan interest is a deduction that reduces your taxable income. Therefore, you will not see your refund increase by the amount shown on your Form 1098-E. This means that with a lower taxable income you will pay less taxes.
According to the IRS, student loan amounts forgiven under PSLF are not considered income for tax purposes. Learn more about the PSLF process. You won't be taxed by the federal government, but your state may tax you. Any debt forgiven as a result of PSLF won't create a federal tax liability for you.
If a taxpayer refund isn't what is expected, it may be due to changes made by the IRS. These changes could include corrections to the Child Tax Credit or EITC amounts or an offset from all or part of the refund amount to pay past-due tax or debts.
Individuals may call 800-304-3107 with questions about a delinquent debt. My spouse and I filed a joint tax return and our refund was offset for a debt that my spouse owes.
If you have an objection to the debt, you have the right to request a review of your objection. If you're successful, your tax refund and other federal payments will not be offset, or the amount being offset may be reduced.