4 reasons the IRS can keep all or part of your tax refund

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

If you have filed your 1040, you should have your tax refund by now (if the IRS owes you one), or that refund should be on its way.  But some taxpayers are getting a shock when they check their bank accounts, discovering that the government kept some of their money.

And it's perfectly legal.

If you are planning a beach vacation with  your tax refund or hope to pay off some debts, there's nothing more frustrating than learning your refund has been confiscated.

But CNN/Money says there are 4 reasons Uncle Sam can legally keep your refund:

  1. Delinquent student loans.  College loans are considered a federal debt, and cannot be easily discharged, even through bankruptcy.
  2. Failing to pay the Obamacare penalty, if you did not sign up for health care by the deadline, and now face a penalty.  This is new as of 2015.
  3. Overdue state income tax.  Yes, the IRS can nab your money if you owe the state.
  4. Past due child support, if your local court decides you are behind.

If you owe more in delinquent loans, taxes, or child support than your refund amount this spring, you'll probably say "doesn't that stink?" That's because the IRS will then garnish next year's refund to get the rest of what you owe. And let's hope that takes care of everything.

Bottom line: If you government or courts say you owe money, they have a legal right to dip into your refund.

So don't let debts pile up, so you don't waste your money.

 

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