If you owe back taxes to the IRS, then yes, the IRS can take your state income tax refund to offset back taxes. When this happens, your state is supposed to give you a notice of the levy, and the IRS will also provide you a notice after the levy is made, with an opportunity to appeal. However, the IRS won’t send you a notice if you’ve previously received a notice of intent to levy.
If you don’t owe back taxes to the IRS, then, no, your current year state tax refund won’t be applied to your current year IRS debt.
For more information, see the Treasury Offset Program website.
The IRS and state tax departments each maintain their own, separate tax collection systems.
This means you can't apply your federal refund to pay off your state taxes, nor the other way around.
For more information about why your state refund was lower than you expected, check with your State Dept. of Revenue.
Here is help for contacting your State Department of Revenue:
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Where did you see the IRS took your state refund? If it was on Turbo Tax that is not true. At the end Turbo Tax shows you a summary of the net combined federal and state. But that is only for your info. You will still get the full amount and need to pay any tax due separately yourself.
Thank you for the info. I will reach out to them. When iij log in to my turbo tax, it initially showed I owed $927 in Federal and was getting a refund of $458 in state. Now my Federal says I owe $469. Subtracting what I initially owed ($927) minus my refund from State ($458) equals $469.
Sorry that is just the way Turbo Tax displays it at the end. Look at your actual federal and state tax returns to see the actual amounts. You still get the full 458 from state and you need to pay the full 927 to the IRS. Turbo Tax is just showing you the overall total combined.
927-458 = 469. That's just a summary for your own info.
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