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NEVER ... a state balance due cannot be withheld from a federal refund. The program shows you a summary screen of the net of the refund less the balance due but at no time was that ever an option in the FILE tab.
In the File section of the program Step 2 and there were state taxes owed you were give specific options on how to pay the taxes owed. How you selected to pay the state taxes owed will be shown on the Filing Instructions page for the state tax return.
If you are referring to a refund offset taken by your State government, please continue to read:
State government agencies have the lowest priority when it comes to garnishing IRS refunds. Therefore, if you’re required to return unemployment compensation payments, or you have outstanding state income tax debts, your federal refund can be garnished to repay these obligations as well. For more information, click here Garnish refund or contact your state here: States
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