If I owe money on my State tax but will receive money back on my Federal return, will only the difference owed be taken out of my bank account?

[JulieH1 · Accepted solution]

No.

The two are not subtracted from each other because they go to different taxing agencies.  The state goes to the Department of Revenue for your state and the federal will come from the IRS.

You will get the full refund and then your state will deduct what you owe them.  Not necessarily in that order.  Sometimes the state does theirs first, it really just depends on when the state and IRS get around to your returns.