Millions of Americans are looking forward to receiving their IRS refunds now that the 2025 tax season has begun. Not everyone who has filed their tax returns will be as fortunate.
On its website, the Internal Revenue Service (IRS) has listed several reasons why certain citizens may not receive their anticipated refund. Certain debts or prior commitments may have an impact on the return of funds because the IRS wants to ensure that all taxpayers fulfill their tax obligations fairly.
If taxpayers don’t meet these requirements, they will have to say goodbye to their IRS refunds
According to the IRS, there are several circumstances in which an individual’s tax refund may be reduced or canceled entirely. According to the federal agency, the Treasury Offset Program (TOP) is the primary tool for making these deductions, as it allows outstanding debts to be deducted directly from IRS refunds. Below, we explain the main reasons that could lead to this action:
Delinquent child support payments
One of the most common reasons the IRS may withhold all or a portion of your refund is if you owe child support payments. Furthermore, if a parent fails to meet their end of the bargain, the Internal Revenue Service may use the tax refund to pay the unpaid child support bill.
Federal debts owed to government organizations
Paying non-tax debts to other federal agencies is another scenario that could result in the cancellation of a tax refund. This includes unpaid federal student loans and obligations under federal programs. In this case, the IRS may deduct the appropriate amount from the tax refund and send it to the organization that owes it.
State income tax liabilities
Along with federal charges, certain state debts may have an impact on the tax refund. If a taxpayer owes money to their state tax authority, a portion of their return may be withheld using the IRS offset program.
Unemployment compensation debts
Finally, the return may be affected by debts associated with uninsured unemployment benefits. If a person owes money for this type of payment at the state level, the IRS may, upon request from the state agency, deduct the appropriate amount to satisfy the debt.
How will the IRS refund offset take place?
The TOP program allows the IRS to deduct money from your refund to offset any of the aforementioned circumstances. This implies that the total return amount will be reduced following the amount owed to any of the aforementioned organizations.
It is critical to remember that any money left over after using your refund to pay off debts will be returned to the taxpayer. The federal agency guarantees that any remaining IRS refunds will be sent to the specified bank account or issued as a check in accordance with the request on the tax return.
What should Americans do if their IRS refunds are reduced?
If the IRS withholds or reduces your tax refund for any of the reasons listed above, you will be notified in writing. This paper will include comprehensive information, such as the initial amount of your return, the amount withheld to pay off the debt, and the organization to which you will be paid.
There will also be the agency’s address and phone number listed. If you believe the amount deducted is incorrect or that the debt does not apply to you, the IRS advises you to contact the agency listed on the notice. This is the most effective way to address any discrepancies or uncertainties you may have about the applied deduction.
What to do if the amount deducted does not match your IRS refunds?
If the amount withheld does not match the amount on the original tax return, the IRS suggests contesting the refund. This can be accomplished by contacting the debt agency or the IRS for additional information. If an error is discovered, the offset can be evaluated and corrected as needed.
The vast majority of taxpayers receive their IRS refunds without issue, but those with obligations may face reductions or cancellations. The IRS strives to meet tax and financial obligations while allowing individuals to contest unfair deductions. If you are affected, take the necessary steps to address your concerns and ensure that the reimbursement is properly processed.
