Does turbo tax automatically deduct from your federal refund if you owe state taxes and pay them also?

[Rachel_W · Accepted solution]

No, TurboTax doesn't automatically deduct from your Federal Refund if you owe State Taxes.  Unfortunately, because the IRS and State Tax Departments each maintain their own, separate tax collection systems, you cannot use a Federal Refund to pay what you owe for State Taxes, nor the other way around.

You will need to mail in a separate payment to your State via check or money order for the State Taxes you owe.  Depending on the State, you may also be able to make the payment online.  Check here for your State Tax Department Contact Info.

[Integra99]

I filed online and after paying over 2000 in Fed. Taxes. I also paid 705 in n.c. state tax.. My Fed. Return was showing 772.. And then I owed 92 in state tax..  Why is my return only 670 now?? That is exactly 92 dollars less than the original amount of 772.  It seems like a strange coincidence that my return dropped exactly 92 bucks.

[Integra99]

I just don't understand how I paid so much to the govt and I'm only getting 1/3 or less back.. I am head of household and I tried to fix that but was unable to go backwards.. I would like to know why my federal return dropped 92 dollars at the very end of the filing program. 

[CassLO]

Please see the TurboTax help topic below, for reasons your refund may be lower than expected:

Why did my refund go down compared to last year's?

[JHARRISON1]

My federal refund shows a total amount ($1000 example) minus the state taxes owed ($500 example). But when I log into the irs site to verify my refund status for federal it shows the full federal refund of 1000$. Why does turbo tax show that I'm only getting a federal refund of $500, if I cannot pay for state taxes owed with my federal?

My state is currently pending payment and I just want to be sure that I am not paying for state owed twice. 

[CassLO]

@JHARRISON1 You are most likely just seeing the TurboTax summary of your federal and state amounts together. Federal law allows only state and federal government agencies (not individual or private creditors) to take your refund as payment toward a debt. 

You can read more about this, in this link: Who Can Garnish an Income Tax Refund?

You can go to this link Topic No. 203 Reduced Refund there is a phone number you can call to see if there was a refund offset.

You can also check by contacting your State directly to make sure they did not receive payment. Click the link below and then click on your state for contact information:

How do I contact my state Department of Revenue?