For the average person, a tax refund check can end up being the equivalent of around two paychecks (give or take). This amount of money can serve many purposes for the typical household: it can pay an extra mortgage payment or two, pay off a few credit cards, or it can be enough money to take that much-needed vacation.
But before you go packing your bags or making other plans for your check, you have to make sure you’re entitled to a refund first, and that nothing is standing in your way of receiving a check this tax season.
Although most taxpayers receive a refund, there are some things that can stop that from happening. Here are a few things that can stop you from receiving a refund this tax season.
1. You (or your spouse) defaulted on student loans
Student loans are one of most common reasons that people have their tax refund checks offset. A default generally occurs after a borrower fails to make payments for 270 days, according to the Department of Education. Around 14% of borrowers default on their loans soon after they are scheduled to begin making payments.
Your joint return can also be intercepted for your spouse’s student loan debt. If only one spouse has a student loan debt (and only one spouse is legally responsible for that debt), you can fill out Form 8379, injured spouse allocation, and request to have only one spouse’s portion of the refund taken, as opposed to the entire refund.
2. You owe child support
According to the Office of Child Support Enforcement, federal refunds have been offset to pay past-due child support since 1982. “Since the program began in 1982 through the beginning of March 2013, more than $35 billion in past-due support was collected from 38 million intercepted tax refunds,” it explains.
As with student loans, if a spouse is not legally responsible for child support, that person may be able to collect his or her portion of the tax return by filling out an injured spouse allocation (From 8379). This, however, depends on individual state laws.
3. You owe an IRS debt
If you were audited by the IRS or you have a debt from a prior tax year for any other reason, the IRS is more than likely going to collect the money you owe to it prior to issuing any refund.
Generally speaking, the more money involved, the higher your risk of audit. That is, a person with a $50,000-per-year income is less likely to be audited than someone earning $1 million per year. In any case, either taxpayer has a chance of being audited.
In some cases, a spouse (or former spouse) may be able to be relieved of the tax debt, interest, and penalties. A tax debt is different from other types of debts, like child support and student loan debts. With a tax debt, the spouse generally would not file for injured spouse relief but for a different type of relief, such as innocent spouse relief or separation of liability.
4. Your income went up (or your tax situation changed)
If you made more money this tax year than you did last year, you may no longer be eligible for certain credits, like earned income tax credit (EITC), which is a refundable tax credit that results in large refunds for millions of taxpayers. According to the IRS, in 2013, more than 27 million taxpayers received a combined total of $65 billion in EITC.
An increase in income may also impact other tax benefits, like the premium tax credit. If you used the premium tax credit to lower the cost of your marketplace health insurance plan, and then your income increased throughout the year, you may even end up owing money because you are not entitled to as much tax credit as you received.
Even if your income didn’t change, your tax situation can change if you adjusted the amount of tax you paid throughout the year. For instance, an employee who adjusted withholding allowances to increase his or her paycheck — and underestimated the amount of tax that person needed to pay — may have to pay that money when it’s time to file.
5. Someone stole your identity
Identity thieves will steal information that can provide them with some sort of financial benefit, and this may include stealing a Social Security number and filing a tax return using that false Social. In the Tampa Bay Times, one taxpayer discussed her experience with this situation, and she didn’t receive her refund until nearly six months after she initially filed.
According to the Tampa Bay Times, “The IRS identified more than 2.9 million incidents of identity theft in 2013 and has described identity theft as the No. 1 tax scam for 2014.”
The IRS has identity theft-related notices that it issues, such as these:
- CP01:”We received the information that you provided and have verified your claim of identity theft. We have placed an identity theft indicator on your account.”
- CP01A: “This notice tells you about the Identity Protection Personal Identification Number (IP PIN) we sent you.”
- CP01S: “We received your Form 14039 or similar statement for your identity theft claim. We’ll contact you when we finish processing your case or if we need additional information.”
If you think someone has stolen your identity, the IRS suggests you contact your local police, file a complaint with the FTC, place a fraud alert on your credit report, contact your creditors, and close any fraudulent accounts. Also, respond to any IRS notices, submit IRS Form 14039, “Identity Theft Affidavit,” and continue to send in your tax return (even if you send in a paper return).