February 4, 2022
reduced refund garnished refund

You may have already received your tax documents for the 2022 season and it’s time to file. Many taxpayers experience some anxiety around filing season because of uncertainty. Will you owe the IRS? Will your refund be garnished? There are a few instances where you can expect the IRS to reduce your refund, or garnish the whole thing.

Unemployment Taxes

Since the start of the pandemic, more Americans have relied on unemployment than ever before. Being aware of unemployment taxes and withholding taxes from each check is extremely detrimental to your following tax season.

If you received Unemployment benefits during 2021 and you didn’t withhold taxes, you can expect to owe the IRS this year.

Tax Withholding Estimator

You don’t have to wait until you file to figure out what you owe. Taking advantage of tools like the IRS Tax Withholding Estimator can help you understand what you will owe and why. Doing this in advance can allow you to start saving, or prepare to make a payment plan with the IRS.

If you’re a business owner, or 1099 filer, you should expect to withhold taxes quarterly. Failing to pay throughout the year leaves you with a large sum during tax season. You can also use the Tax Withholding Estimator to learn more about what you owe.

Child Support

Owing court ordered payments such as child support can also garnish your refund. Child support agencies collected over $30 billion in back child support through the federal tax refund offset program since 2010.

To learn how much you owe in child support, you can visit your state’s child support website (childsupport.ca.gov for Californians) and use the guideline calculator. If you have any bills, letters, or contact information regarding your case, you can utilize that information as well.

How to stop the IRS from taking your refund?

Given the state of the economy, a lot of people are experiencing hardship right now. The IRS is not oblivious to the possibility that you can’t afford to pay them right away. You can see if you qualify for Currently Non-Collectible (CNC) status, which will temporarily stop the IRS from collecting payments from you. Letters, calls and other means of collection activity must desist once your status changes to CNC.

You must be able to prove hardship and that you need the money for your livelihood. Livelihood can be travel expenses for work, buying food for your family, continuing an education, etc.

Do you owe a large sum in back taxes that you can’t pay back?

Give Optima a call for a free consultation at (800) 536-0734 to learn what your options are for tax debt relief. You may qualify for the IRS Fresh Start Program, which can get you on an affordable payment plan, or even reduce your liability balance.

Need more time to file your taxes? Download the Optima® TAX APP and file your extension for free.