The IRS Took My Tax Refund

Did you get a letter from the IRS or State of Vermont? Both the IRS and the Vermont Department of Taxes (VDOT) oversee a “refund offset” program. This is a program where state and federal agencies (claimant agencies) can submit a debt to the IRS or VDOT who will apply your tax refund to satisfy that debt. For participation in Vermont's offset program, the claimant agency must send you notice of an offset, and give you the opportunity to appeal.

Sometimes tax refunds are taken for debt that is not owed to the IRS. The most common examples are child support debt, student loan debt and state tax debts. When refunds are taken for non-IRS debt, it is done through the Treasury Offset Program (TOP).

Once a state or federal agency puts a debt into TOP, the IRS has no power to decide whether the debt is valid. The IRS must pay the IRS refund to the agency. If you disagree that you owe the debt or with the taking of your refund, you have to dispute it with the agency that put the debt into TOP. Read more about the Treasury Offset Program.

You can call the Treasury Offset Program at 1-800-304-3107 to see if there is a debt under your social security number.

If you are married and have debt in TOP that is only owed by your spouse, think about filing an injured spouse claim. (See below.)

An injured spouse claim will not help you get your part of the refund if both you and your spouse owe the debt. For example, any tax due on a tax return filed as “married filing jointly” is a jointly owed debt. Both spouses are responsible for paying it. If the couple's refund is withheld in the future to pay the debt, neither spouse is an injured spouse.

If you feel that you should not be responsible for your spouse’s tax debt after signing a joint return, you may have an “innocent spouse” claim, which is different than an “injured spouse” claim.

For questions about innocent spouse cases, fill out our form and we will call you back. Your information will be sent to Legal Services Vermont, which screens requests for help for both Vermont Legal Aid and Legal Services Vermont. You can also call us at 1-800-889-2047. 

How to qualify

To qualify for an injured spouse claim when a refund is withheld, you must meet all three of these conditions:

1. You are not required to pay the debt.
   This means your spouse had the debt before you got married or that only your spouse is responsible for paying it.
   Examples: past-due child support, defaulted student loans, foreclosures on federal loans, unpaid state income tax and any separate federal debt.
    
2. You reported income on the joint tax return.
   Some or all of the income reported on the joint return (when the refund was withheld) must be your income from a job, self-employment or investments. If your taxable income for the tax year in question is $0.00, then your "share" of any refund is also $0.00.
    
3. You made and reported payments on the joint return. 
   Payments include federal income tax withheld from your wages, estimated tax payments and refundable tax credits, such as the earned income tax credit or additional child tax credit.

How much is yours?

Your share of a refund is based on the amount of federal income tax withheld from your paycheck or estimated tax payments you made on your self-employment income.

Any additional child tax credits will also be included in your share. Any earned income tax credit will be split between you and your spouse based on how much each you earned – that is, your contribution to the joint adjusted gross income.

How to make an injured spouse claim

Make a claim by filing IRS Form 8379. Get Form 8379 online or by calling the IRS at 1-800-829-3676.

• If you have not filed your joint tax return and received a notice that your refund will be withheld, complete your return and attach Form 8379 when you file it. Write “injured spouse” in the upper left corner of the first page of the return. You can still file your tax return online.
   
• If you have already filed your joint return and found out that your refund was withheld, complete Form 8379 as soon as you can and mail it to the IRS Center where you filed your tax return. If you lived in Vermont when you filed the joint tax return, mail it to:
  
  Department of the Treasury
  Internal Revenue Service Center
  Kansas City, MO 64999-0002
  
  If you aren’t sure what address to use, look it up on this irs.gov web page.

• Attach copies of all W-2 and 1099 forms received by you or your spouse to Form 8379.

If you disagree with the amount

Contact the IRS to ask for a copy of the Injured Spouse Claim Worksheet. You can also contact us at Vermont Legal Aid’s Low-Income Taxpayer Clinic. Fill out our form and we will call you back. Your information will be sent to Legal Services Vermont, which screens requests for help for both Vermont Legal Aid and Legal Services Vermont.

More information

This IRS Taxpayer Advocate Service web page explains injured spouse relief and how to ask for it. It has links to the IRS forms and publications.