If I owe taxes last year federally and I am getting a refund, does turbo tax deduct the funds to pay what's owed last year? Or would I need need to contact the IRS

[Mike9241]

no TT won't deduct the funds from your 2020 refund but the IRS may even if you set up a payment arrangement. 

[DoninGA]

TurboTax has no way to know if you have taxes owed for a prior year.

If you filed the 2020 tax return with a tax refund, the IRS will seize the refund for the unpaid taxes and apply the refund to the amount owed.  Any remainder will be sent back to you.  If the refund does not satisfy the debt the IRS will send you a bill in the mail for the amount owed plus penalties and interest.

[VolvoGirl]

No, neither.  The IRS will automatically take any past due taxes out of any refunds you get.  You don't have to tell them or note it on your tax return.