How Can My Income Tax Refund Be Garnished?

10:49 PM, Jan 21, 2010   |    comments
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Columbia, S.C. (WLTX) - Pretty soon, Uncle Sam is going to be delivering those federal income tax refund checks. But if you owe certain kinds of debt, don't be surprised if your refund check is intercepted.

That's right. Your income tax return can be garnished if you owe the U.S. Department of Education, IRS, the Department of Treasury, or creditors.

Did you take out a student loan? Well, if you are in default more than 270 days, under the Treasury Offset Program, your refund check can be garnished.

To avoid the problem, simply make payment arrangements or reply to any notices from the agency indicating your intent to pay.

Perhaps you failed to pay income taxes in recent years or failed to comply with an IRS payment arrangement. Well, Uncle Sam can garnish your federal income tax refund in its entirety.

Failure to pay child support could also result in your income tax refund being taken. The Department of Treasury can offset your refund to satisfy any obligations you have with your state that you failed to meet.

Do you have any judgments filed against you by a creditor? Watch out. They can garnish your federal income tax refund, too by filing a court order.

Here's how it works. If you've ignored a creditors' attempts for payment on a debt like a credit card, the company can file a judgment asking your state to freeze your bank account, stopping you from withdrawing money.

Also, any deposits into your bank account, including a federal refund, can be held to pay off the creditor who filed the judgment. 

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