I’m a bit in debt, like most people I know. Because it’s student loan money that I owe, which is federal, the IRS took my refund without warning to pay my debt! Has anyone else ever had similar happen?
I had the State of California once threaten to withhold my refund if I didn’t pay a fine I owed. How is that “screwing” you? It’s money you owe the Government.
You owe the government money. The government kept your tax refund and applied it to the debt you owe. Now you owe the government less money. How does that screw you?
I would be really pissed if the IRS was giving refunds to people who are behind in their government debt.
BTW, it isn’t with out warning. They have been doing it for a number of years.
I think you missed the point of a refund. She overpayed her taxes and this was money that the government was not owed. I have a problem with the IRS being able to say oh this extra payment is now goinng to be applied to another debt no matter what your situation is.
A refund is not ther IRS giving you money, its money that the IRS should not have received in the first place.
While it does make the debt that much smaller, I do think they “screwed you” as JackaRoe says. They shouldn’t have had the money in the first place, so who are they to spend it as they want? That money should have gone to YOU, and YOU should have been able to decide where it went (although paying off your debt would have been a very good choice!) Since I know you’re in a tough spot, and moving and all - well, I’d be angry too, since moves can me MUCH more expensive than planned.
That said, I don’t know what the law(s) are regarding this, but most likely what they did was perfectly legal. Just stupid, IMHO.
I didn’t miss the point.
She owed the government money in the form of student loans. The governemnt owed her money in the form of a tax refund. They merely applied her overpayment in one area to her debt in another.
I would be pretty pissed if the IRS took your refund and gave it to Citibank, but to apply it to student loan debt is completely fair.
If you don’t want the goverment to take your refund don’t over pay them. You could have used the money through out the year to make your student loan payments.
Considering the IRS FAQ says in so many words that they will do this, I’d guess that it is indeed perfectly legal.
If you owed me money for something and then overpaid me for something else, I’d probably keep the overpayment too.
One more thing.
The IRS has been doing this since 1986.
http://www.ed.gov/PressReleases/04-1995/IRS.html
The Department of Education collect hundreds of millions of dollars this way every year. This is money that is legally owed to the government and really to the people of the United States. This is money that can be used to make student loans to other students.
http://www.nolo.com/lawcenter/ency/article.cfm/ObjectID/76BDA7E4-496A-4602-AC7C62F179C9A46D/catID/2E00F7A7-E208-4858-BD0B8308A4D30D8A
That’s sucky, and I’m sure you’re dissapointed, but I don’t know that I’d go so far as to say they screwed you. To avoid this in the future, you should probably adjust what you claim through your payroll at work so less taxes are withheld. If I may ask–have you actually defaulted on your student loans or were you in a deferment arrangement?
Mine are currently being deferred and I’m expecting a sizable refund and now I’m worried that I won’t get it.
??
Question.
When you get a student loan do you not have a set payment scheme?
If so why would they take money from another source? if it’s non of my business just say so but are you in arrears etc. with payments? If so I can see why the IRS would take the refund. If not that sucks balls.
Heh. That’s how I paid off my student loan. I fell behind on payments, and they took my refund checks until I had them paid off. To make the process quicker, I had an additional $20/week in taxes taken out, so they’d get $1000-1500 at a time. Only missed 2 refund checks, and they stayed off my back the whole time. They knew they had me by the short hairs anyway (the other option was wage garnishment) so everyone was happy.
I don’t think you need to worry unless you are behind in your payments. Deferring the loan is allowed if you do it according to their guidelines and it doesn’t show up as non payment. I have received refunds while my loans were being deferred, never had a problem.
I also had my tax refunds garnished for a few years for student loans. Once I entered into a payment plan with the holder, they stopped. I was delinquent in paying (you can only defer them so many times). I figured getting $1500 once a year was more than they were going to get from me than if I could pay every month.
(I FINALLY paid my last student loan this past September. It was beautiful)
My tax woe?
Remember that $400 Bush was SOOOOO gracious to give parents this past summer? That FREEEEEE money? Bullpuckey. Got taxed on it, reduced my refund quite a bit. Jerk. (would say more, but this is not the pit)
That isn’t true. The tax rebate was not taxable.
I think you need to talk to who ever prepared your tax return. If they included the $400 as income they did it wrong.
Oops…lost the last half of my post.
http://www.irs.gov/newsroom/article/0,,id=120037,00.html
If you are eligible for the full credit you get an additional $600 on your 2003 tax return. If you were not eligible for the credit you get to keep the $400 anyway. It was an advance on the increase in the credit.
And, IIRC, it was an advance on the next refund. It was in 2002, right? So, if you would ordinarilly get a $1000 refund, in 2003 you would only get $600. In 2004 you’d be back to getting $1000.
Exactly Casey.
Except that at the same time they gave the advance they also increased the amount of the credit.
In 2002 the credit was $600.
In 2003 the credit is $1,000. Many people got their $400 in the advance check so they still only get $600 at tax time.
In 2004 they will get the full $1,000 at tax time.
Did you do your own taxes or did you have a tax professional do them? Each and every year, our tax guys always tells us the amount of our refund, then fallows up by saying the gov’t will withhold taxes if we owe the gov’t money. They don’t just with hold for student loans, they also wihthold money if you are behind on child support.
This thread is better suited for The Pit.
Cajun Man
for the SDMB