If I am on a payment plan for taxes owed in a previous year, does the return I'm expected to receive this year consider the taxes still owed from the previous year or will this amount be automatically taken by the IRS?

[blakecrooks]

I owed taxes last year and began a payment plan, for which I'm still paying towards. I'm working towards completing my taxes this year using Turbo Tax again. It appears I will receive a return this year. Does this mean that the taxes that I paid over the past year in addition to payments made toward the past taxes are included in what Turbo Tax has calculated as my return? Or does the expected return not include past owed taxes or payment plans and therefore the expected return will automatically be taken by the IRS to apply towards the past taxes owed that I have a payment plan for?

[xmasbaby0]

Even if you are on a payment plan with the IRS, if you have a refund shown on your 2025 tax return, the IRS will take your 2025 refund and apply it towards the back taxes owed.   They will send you a letter a few weeks after they do that.

[MaryK4]

The past taxes are not calculated when completing the current year return.  If you owe back taxes and/or on a payment plan, the IRS will apply this year's refund to that.  The IRS will also apply any state tax refund.  The IRS will automatically apply any tax refund to an existing payment plan balance, reducing the total debt. You must continue making regular monthly payments unless the refund pays off the balance in full- the offset does not replace scheduled payments.  See Refund inquiries | Internal Revenue Service.

If the offset will result in economic hardship, see How to Prevent a Refund Offset If You Are Experiencing Economic Hardship.