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Federal and State adjusted refund amount to pay previous year state tax liability

I see a lot of people here saying it's impossible to pay your state income tax liability with your federal return; while that is correct, it is possible for your federal refund to be adjusted to pay previously delinquent state tax liabilities. IE You submitted your 2023 federal tax and had a refund of $1000. If you owed state income tax from 2021 for, say, $200, the federal refund can be adjusted to $800 and the $200 applied to your previously owed tax liabilities. You'll get a letter in the mail explaining the adjustment, how much it was, and where it went.

 

It's also possible for your state refund to withhold the same previously owed tax liabilities from your current year's state refund. Again, you'll get a letter in the mail from your state dept of rev. explaining the adjustment, how much it was, and where it went.

 

In some cases the federal and state refunds could/will be adjusted to pay the same exact previously owed tax liability, effectively double paying the owed amount. Pay close attention to the letters you get explaining the adjustments and make sure it isn't the same item. If this happens contact your state dept of rev. and see how this can be resolved.

 

I hope this clears up some of the confusion I've been seeing.

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1 Reply

Federal and State adjusted refund amount to pay previous year state tax liability

You are confusing having an offset order to your refund with just paying current tax due.  Those are not the same situations at all.   If you owe back taxes to the IRS or to the state, the IRS can seize your federal refund to pay those back taxes, or to pay delinquent child support.

 

TurboTax never knows about offset orders to your refund.   You can check to see if the IRS has an offset order for your refund.

 

https://www.irs.gov/uac/tax-refund-offsets-pay-unpaid-debts

 IRS Treasury Offset Program Call Center at 1-800-304-3107

 https://www.irs.gov/uac/tax-refund-offsets-pay-unpaid-debts

 

https://ttlc.intuit.com/community/refunds/help/what-is-a-refund-offset/00/26301

 

Reduced Refund      https://www.irs.gov/taxtopics/tc203

 

 

 NOTE: You can contact the IRS Treasury Offset Program Call Center at 1-800-304-3107 to ask if they have an offset for you on file. TurboTax would not have that information.

 

https://turbotax.intuit.com/tax-tips/tax-payments/who-can-garnish-an-income-tax-refund/L7cPPzDyc

 

 

You cannot, however, expect your current 2023 state tax due to be paid from a federal refund you are receiving.   Many users become confused by the summary given by TurboTax that nets out the difference between a federal refund and state tax due, and imagine that the state will be paid from their federal refund.  That does not happen.  If you owe state tax due for the current tax year, you have to pay it yourself using the state' s preferred method of payment--which is usually by check or money order or by using the state's online tax payment site.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
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