Can the IRS take my tax refund for child support arrears?

If you are behind in child support and your state child support enforcement office collects your payments from you, the IRS will take your tax refund to cover the arrears (often called a tax refund seizure). The IRS will then give the money to the appropriate child support agency.

Read on to learn more about IRS tax refund seizures for child support and steps you can take to avoid the seizure or minimize its effect on your finances.

Planning Ahead to Avoid the Tax Refund Seizure

You can take steps to prevent the IRS from taking your tax refund, or reduce the amount it takes. Here’s how.

Adjust your withholdings. When you initially started working for your employer, you instructed it how much to withhold from your paycheck for the purposes of taxes. You may periodically adjust the amount withheld so as to obtain a larger or smaller refund at the end of the year. Exercise care if you increase your withholdings because you do not want to end up owing the IRS come tax season.

If married, file separate returns. If the debt belongs to your spouse and you want to avoid having your refund seized, you can file separate tax returns. Be aware, however, that if you do this you might miss out on valuable exemptions to which you would otherwise be entitled.

IRS Notification of the Tax Refund Seizure

The Financial Management Service, a division of the Department of Treasury, sends you notification of the proposed seizure before it happens. Take this opportunity to address the proposed offset to decide on a course of action – you might be able to minimize the effect of the seizure on your finances.

What to Do If You Receive Notice of an IRS Tax Refund Seizure

If you receive an IRS notice of tax refund seizure to cover child support arrears, here are some options:

If married, file an “Injured Spouse Allocation” form. If you are married and not responsible for the debt, the IRS allows you file a special form entitled “Injured Spouse Allocation” which, if completed and submitted properly, allows you to keep your portion of the refund. The IRS typically calculates this amount based on how much money your employer withheld from your wages for taxes the previous year. File this form with the return or immediately after receiving notice of seizure.

File Chapter 13 bankruptcy. The bankruptcy code does not allow you to erase your child support arrears but it does allow you to restructure that arrearage and pay it down over a three to five year period. The bankruptcy court considers child support arrears a priority debt that gets paid before any other debt. (Learn more about paying child support in a Chapter 13 bankruptcy.)

What to Do If You Are Owed the Child Support Arrearage

If you want the IRS to seize the refund of the person who owes you child support, it will do so automatically if the state child support enforcement office collects payments from the parent that owes the money. However, if the child support enforcement office does not participate in the collection of those funds, then you need to petition the court to request it be collected in this way. That way, the IRS sends the future refunds directly to you to satisfy the arrearage.