Your incapability to pay for the child support tax can compel the enforcement agency to seize your tax refund. It means that the child support will collect your unpaid taxes from the Internal Revenue Service (IRS) to cover the arrears.
If you are facing the same, you have two options. You can either allow the IRS to intercept your refund. Or there can be a mistake, and you can take quick action to avoid the tax refund seizure. Or, at the least, you can try to minimize the intercepted amount to lessen the financial burden.
The best possible approach is to contact a family law attorney who can help you overcome this situation efficiently.
However, before reaching a final decision, you have to weigh the intercepting tax refund and the fee payable to your lawyer. In case you were expecting a substantial one, consulting the attorney is advisable.
There are specific ways you can employ to avoid child support from taking your tax refund. Take a look at the possible ways and choose the one that matches your situation the best.
Whose tax refund will be intercepted?
Child support agencies report to the Federal Office of Child Support Enforcement about the people who are behind child support. The Treasury Department’s Financial Management Service sends the Pre-Offset Notice to those behind the taxes to inform them about intercepting their tax refunds.
For intercepting the tax refund, the following conditions apply:
- If the receiver of child support receives Temporary Assistance for Needy Families (TANF) and the unpaid child support is at least $150 in arrears
- If the receiver is not receiving any assistance and the unpaid child support is at least $500 in arrears
What to do to avoid child support tax refund?
Request the administrative review
If you disagree with the child support arrears, you have the right to request an administrative review. To prove your stance, you have to provide sufficient evidence to disagree with the proposed offset compared to actual child support arrears. If you have a recent statement about it, it would be pretty easy to prove your point.
If, as a custodial parent, you are not receiving TANF benefits, you can stop the tax refund seize by claiming that child support arrears do not qualify for the proposed income tax offset. To be eligible for the arrears, it must be equal to $500.
➡LEARN MORE: How long do you have to work to file taxes?
File the injured spouse allocation form
A non-custodial parent who has remarried isn’t responsible for his partner’s child support. He can request the IRS to keep his refunds separate from his spouse’s refund by filing an injured spouse allocation Form 8379.
You can file this form before the notice with your income taxes, or you may file it when you receive the offset notice. Here is a sample for you to examine it:
File Chapter 13 Bankruptcy
With bankruptcy law, you cannot stop tax refund seize, but you can restructure the arrears to pay over a time period of 3-5 years.
Adjusting the income tax withholding would not affect your current tax return offset, but it will save your tax return from the future offset. With a lower percentage of withholding income, you can keep more money and may not be eligible for a tax refund, thus not subjected to any tax refund offset.
However, this should be done watchfully as you can end up owing the IRS for not paying the taxes.
File the income taxes separately from your spouse
You can file your income taxes separately from your spouse to save his income from the offset. However, your spouse may have to pay more taxes at the end of the year.
A word of caution
Losing your tax refund is distressing. You should try every possible way to stop the interception of your tax refund. If you failed, it is better to allow the IRS to continue the tax refund offset process and avoid severe penalties.
For years I have studied the irs regulations regarding forms and taxes. All the information in this blog is sourced from the Internal Revenue Service (Irs) of the United States government .
Salesforce Certified SALES & SERVICE Cloud Consultant in february 2020, Salesforce Certified Administrator (ADM-201) and Master degree in “Business Analytics & Big Data Strategy” with more than 13 years of experience in IT consulting.