If you owe money to the IRS and have a payment plan for a previous year, will the amount you owe to the IRS get deducted from your refund for 2014 to pay what you owe?

[DJS · Accepted solution]

Yes

Understand your agreement & avoid default

• Your future refunds will be applied to your tax debt until it is paid in full;
• Pay at least your minimum monthly payment when it's due;
• Include your name, address, SSN, daytime phone number, tax year and return type on your payment;
• File all required tax returns on time & pay all taxes in-full and on time (contact us to change your existing agreement if you cannot);
• Make all scheduled payments even if we apply your refund to your account balance; and

No. A condition of your installment agreement is that the IRS will automatically apply any refund due to you against taxes you owe.

• Because your refund is not applied toward your regular monthly payment, you must continue making your installment agreement payments as scheduled and in full.
• Regardless whether you are participating in an installment agreement or other payment arrangement with the IRS, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. For more information on these non-IRS refund offsets, you can call the Bureau of the Fiscal Service (BFS) at 800-304-3107 (toll-free)

[kpaschal86]

I am suppose to get a child credit and it is not showing up in amount at final owed..is this because the amount was automatically taken from irs??

[stephaniempietsc]

When this says automatically... does that mean when we finish at the end of filing through Turbo Tax and it says what my refund will be, that means that all of my previously unpaid taxes were paid and are now has a zero balance and the refund it says is truely what is coming back to me? or is it calculated when Federal and State look at it and approve it?

[michael-welcher]

TurboTax has no idea what you owe to the Fed and State.  The amount you see when you file is the current year refund which then will be reduced or eliminated completely if you owe the government.  For example, if you owe the IRS $1,000 from prior year(s) and TurboTax is showing that you will receive a $800 refund in the current year....the IRS will take the entire $800 and you will not receive any refund - plus you will still owe $200.

[nafeesahussain]

Does this mean that the person will be paying twice? because they withheld their refund for the owed amount and they have to also keep paying the monthly installments.

[DJS]

Once the full amount of your debt has been paid, whether through your payment agreement or from your tax refund, you have no further obligation. The statement that you receive from the IRS should indicate whether or not you have any further monthly obligation. The agreement states: "We will apply your federal tax refunds or overpayments (if any) to the entire amount you owe, including the shared responsibility payment under the Affordable Care Act, until it is fully paid or the statutory period for collection has expired."

[m06wc21]

Just a quick thought, does the IRS take state refunds as well while you are under an installment plan?

[DianeW777]

Yes, it's possible.  The IRS has a frequently asked question (FAQ) about this topic.

• ITG FAQ - What actions can the IRS take to collect taxes?

@m06wc21