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brooklynn8483
New Member

I owe back taxes , will the IRS offset my recovery rebate credit ?

 
24 Replies
MinhT1
Expert Alumni

I owe back taxes , will the IRS offset my recovery rebate credit ?

No. According to the law, the IRS is not allowed to offset your Recovery Rebate credit for back taxes.

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brooklynn8483
New Member

I owe back taxes , will the IRS offset my recovery rebate credit ?

I know they are not allowed to keep stimulus payments for back taxes but what about me claiming the rebate on my tax return ? Are tax returns different when it comes to owing the IRS money ? 

HelenC12
Expert Alumni

I owe back taxes , will the IRS offset my recovery rebate credit ?

Your second payment will not be offset (garnished) for any Federal or state debts and is protected from garnishment, per IRSeven if it's on your 2020 income tax return.

 

Your first stimulus money:

  • The CARES Act limits offsets of Economic Impact Payments to past-due child support. 
  • No other federal or state debts that normally offset your tax refunds will reduce the payment.
  • Nevertheless, tax refunds paid under the Internal Revenue Code, including the Economic Impact Payment, are not protected from garnishment by creditors once the proceeds are deposited into an individual’s bank account.
  • See Economic Impact Payment Information Center — Topic D: Receiving My Payment.

 Note: The stimulus payments are not taxable income.

 

For additional information, see How will the second stimulus impact me?

 

 

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Dionna
Level 2

I owe back taxes , will the IRS offset my recovery rebate credit ?

Hi,

My name is D i hope it's ok i chime in . I am a customer as well with Turbotax and according to Tax Advocate Erin Collins and some news outlets based on a retroactive law change in the year-end spending package the rules have changed : outstanding stimulus payments may be offset for back taxes. I noticed that IRS attachment you sent was from last year which means its no longer valid correct? I just want to ensure we as customers are getting the most accurate information and i called IRS stimulus information line there information is from last year too.

MaryM428
Level 10

I owe back taxes , will the IRS offset my recovery rebate credit ?

This is the latest update from the IRS Newsroom,

 

Look at Question D1:

 

Q D1. Will my payment be reduced or offset if I owe tax, have a payment agreement with the IRS, owe ...

 

A1. The CARES Act limits offsets of Economic Impact Payments to past-due child support. No other federal or state debts that normally offset your tax refunds will reduce the payment. Nevertheless, tax refunds paid under the Internal Revenue Code, including the Economic Impact Payment, are not protected from garnishment by creditors once the proceeds are deposited into an individual’s bank account.

Dionna
Level 2

I owe back taxes , will the IRS offset my recovery rebate credit ?

Hi Mary,

That IRS information is dated 11/2020 last year that law has expired and no longer valid for 2021 per the IRS and i caled them [phone number removed] option 7. They quoted the rebate is applied to all back taxes and current taxes owed. But what i was wondering is if your filing taxes for that year 2020 for the rebate and it was valid in 2020 shouldnt it still be applicable that there should be no offset?

JohnW152
Expert Alumni

I owe back taxes , will the IRS offset my recovery rebate credit ?

According to the first three Receiving My Payment FAQs – all updated January 19, 2021 – on the IRS’s Questions and Answers about the Second Economic Impact Payment page, the IRS won’t offset the second Economic Impact Payment.  If you haven’t received it yet, you can claim it in your 2020 tax refund.

 

Dionna
Level 2

I owe back taxes , will the IRS offset my recovery rebate credit ?

Yes john thats what i said when i called the IRS they said the $600 wont be touched if its mailed to you or direct deposit but if you file the tax credit on your 2020 taxes it will be offsetted they told me where to go on the IRS website for this info under the recovery rebate tax credit this was updated january 26th 2021 quote:

The Recovery Rebate Credit is authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the COVID-related Tax Relief Act. It is a tax credit against your 2020 income tax. Generally, this credit will increase the amount of your tax refund or decrease the amount of the tax you owe. So John could your company please make sure your giving out accurate information as your customers may come back to ya'll saying you told them otherwise and with written proof through these messages. I hope this helped

DoninGA
Level 15

I owe back taxes , will the IRS offset my recovery rebate credit ?

@JohnW152 @MaryM428 

Go to this IRS website for the Recovery Rebate Credit - https://www.irs.gov/newsroom/recovery-rebate-credit

 

The Recovery Rebate Credit is authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the COVID-related Tax Relief Act. It is a tax credit against your 2020 income tax. Generally, this credit will increase the amount of your tax refund or decrease the amount of the tax you owe.

Dionna
Level 2

I owe back taxes , will the IRS offset my recovery rebate credit ?

Yes John i asked the same thing of the IRS i said isnt it suppose to be only for 2020 tax year owed taxes because if im not mistaken if they attempt to offset that refund (tax credit) for back taxes it will give the IRS an error when calculating but they reinterated that it will apply to both current and back taxes. I called them several times same answer

Dionna
Level 2

I owe back taxes , will the IRS offset my recovery rebate credit ?

Hey im in the same boat as many of your customers are or will be i have a pending tax return for 2020 with the tax rebate and it looks like i will be getting nothing back from it because of back taxes i owe

DaveF1006
Expert Alumni

I owe back taxes , will the IRS offset my recovery rebate credit ?

Yes, this is correct. If you owe back taxes, your entire tax return, including the Recovery Rebate may be offset.

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Dionna
Level 2

I owe back taxes , will the IRS offset my recovery rebate credit ?

Thank you Dave Please make sure this information is being relayed to your customers correctly by your tax agents maybe some training is needed. Glad to help

Sugabear942
Returning Member

I owe back taxes , will the IRS offset my recovery rebate credit ?

I am very confused each TurboTax expert representative tells me a completely different story I was told literally by the IRS upon their needing to verify my identity that If I did not receive my Stimlus check in 9 weeks for the 1sr two payments file it as a recovery rebate line % 30 for my 2020 taxes an that No Stimlus payment could be taken or held back for any reason than IRS garnishing my wages or my wages being garnished period or child support those were the only reasons to hold Stimlus payments so there for now if IRS is specifically stating that we have to file it as Recovery Rebate in order to receive the 1st two if they were not received just so that they can take it

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