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Ask Susan Responses
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Taxes: Refund Interception |
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More Ask Susan |
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I have a defaulted student loan that has now resulted in a wage garnishment. I understand that it was necessary for this to happen at this time for I had no other financial options open to me. My question is, now that a garnishment has been put on my wages can the government also garnish my tax refunds? -Jay |
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Jay,
It is my understanding that the government can garnish wages (up to 10 percent of your net wages) and intercept your tax refund. In addition, your defaulted loan might prevent you from obtaining new loans and might make you ineligible for consolidation. For more information and repayment advice, visit the section on student loans.
Susan |
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I have been struggling financially and am seriously delinquent on my defaulted student loans. Is it possible for my taxes to be offset to pay on my student loans? I always count on the money I get back to help catch up on bills. -Mitchell |
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Mitchell,
Yes, it is possible for your tax refund to be intercepted to satisfy these debts. According to the Department of Education, if the offset of your federal tax refund creates a severe hardship for you, it is possible to request a refund. Examples of extreme hardship include very high medical expenses or the threat of eviction from your home. To request a refund, you will need an explanation of why the offset is causing an extreme hardship, a copy of your income tax form and other proof of income, copies of your monthly bills, and, if possible, copies of the bills that represent your case for extreme hardship. Send this information to your guaranty agency.
Good luck,
Susan |
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My paycheck is currently being garnished for an unpaid medical debt. Can my tax refund also be confiscated? -Cam |
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Cam,
As far as I know, only a government agency can intercept a tax refund. Refunds can be intercepted for student loan debt, child support and tax debt. For more tax information, visit www.irs.gov.
Susan |
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