This means some or all of your tax refund would go toward paying your defaulted student loans. That said, you may be able to avoid this tax refund offset, or even get back through a tax refund offset reversal. Here are tips that may help you stop student loan tax garnishment. Specifically, we’ll look at two cases:
What do you need to know about student loan garnishment?
You will continue to use your standard IRS Form 1040 in order to file your annual federal income tax report. Regardless of your wage garnishing, Form 1040 will act as the official report on your adjusted gross income and all student loan wage garnishment and taxes included within it.
What happens if you default on your student loans?
When you default on your loans, your wages can be garnished, which means the Department of Education can take money directly out of your paycheck. It also can work with the Internal Revenue Service (IRS) to use your tax refund to repay your defaulted student loans, which is known as a “tax refund offset.”
What to do if you get your tax refund garnished?
If your tax refund was garnished because you defaulted on your student loans and you’re in financial hardship because of it, you might be able to get it back. The student loan tax offset hardship refund process can return your tax refund or stop it from being taken away.
Is there Statute of limitations on student loan garnishment?
There is no statute of limitations on federal student loans, so a tax offset can take place every year until your entire student loan balance is gone. The IRS is legally required to notify you by mail if they plan to confiscate your tax refund, and you have some time to respond.
Can a student loan holder take your tax refund?
This is the part of the U.S. Department of the Treasury tasked with taking federal payments to cover delinquent debts owed to government agencies, such as past-due child support and defaulted student loans. Your loan holder will send you a tax offset notice before your refunds are seized.
