Have you ever wondered what would happen if your tax refund was reduced due to outstanding debts? According to IRS regulations, your federal tax refund may be offset if you owe certain types of debt, including unpaid child support, non-tax debts to federal agencies, or state income tax obligations. Unemployment compensation debts—particularly those involving fraudulent payments—may also be subject to offset.

The Bureau of the Fiscal Service (BFS) processes tax refunds and may offset them through the Treasury Offset Program (TOP). If you discover your refund has been reduced, your first step should be to contact the relevant debt agency to verify the offset details.

Understanding the Offset Process

When the BFS offsets your refund, you'll receive a notice detailing:

  • Your original refund amount
  • The amount that was offset
  • The agency that received the funds
  • Contact information for that agency

For assistance, contact the BFS TOP call center at 800-304-3107 (TTY/TDD: 800-877-8339), Monday through Friday, 7:30 a.m. to 5 p.m. CST.

If any portion of your refund remains after the offset, the BFS will disburse it using the method you selected when filing your return (either by check or direct deposit).

Innocent Spouse Relief: Claiming Your Refund Portion

If you filed a joint return but aren't responsible for the debt that caused your refund to be offset, you may be eligible to recover your portion of the refund by filing Form 8379, Injured Spouse Allocation . You can submit this form:

  • With your original joint return (Form 1040 or 1040-SR)
  • When claiming a joint refund with an amended return (Form 1040-X)
  • Separately after receiving an offset notice

For joint returns submitted with Form 8379, write "Injured Spouse" in the top left corner of the first page. The IRS can process this form before any offset occurs.

Processing Times: Electronically filed returns with Form 8379 take approximately 11 weeks to process, while paper filings require about 14 weeks. If filed separately after the joint return has been processed, expect an 8-week processing period.

Important Filing Considerations

When completing Form 8379:

  • Follow all instructions carefully
  • Do not attach a copy of your previously filed joint return
  • Mail the completed form to the same service center where you filed your original return

The IRS will determine your share of the joint refund based on community property laws if you reside in a community property state.

Not all debts qualify for tax refund offsets. If you're uncertain whether a specific debt might affect your refund, contact the BFS TOP call center for clarification.