IRS Refund Offsets 2025 — Why Your Refund Was Reduced or Taken

You filed your taxes, expected a refund, and then got less than you thought — or maybe no refund at all. This situation usually means your refund was offset.

In 2025, the Treasury Offset Program (TOP) allows the government to reduce your IRS refund to pay certain debts. Here’s what that means and what you can do.

What Is an IRS Refund Offset?

A refund offset occurs when the IRS applies part or all of your tax refund toward debts you owe. Instead of receiving the full amount, the government redirects the money to another agency.

Common Reasons for IRS Refund Offsets 2025

1. Past-Due Child Support

   • One of the most common offsets.

   • Even a small amount of overdue child support can reduce your refund.

2. Defaulted Federal Student Loans

   • If you owe money on federal student loans, your refund may be used to repay them.

3. Federal or State Taxes Owed

   • Past tax debts can cause the IRS to offset your current refund.

4. State Debts

   • Some states report debts (like unemployment overpayments) that may trigger offsets.

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How to Check If Your Refund Was Offset

• Notice in the Mail: You’ll receive a letter from the Bureau of the Fiscal Service (BFS) explaining the offset.

• Treasury Offset Hotline: Call 1-800-304-3107 to check if your refund was reduced.

• IRS Transcript: May show an adjustment code instead of Code 846.

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What to Do If Your Refund Was Offset

1. Read the Notice Carefully

   • It lists which debt was paid and which agency received it.

2. Contact the Agency Directly

   • The IRS can’t reverse an offset. You must work with the agency that reported the debt.

3. Request a Review if Error

   • If you believe the offset is wrong, contact BFS immediately.

4. Plan Ahead

   • If you owe debts, future refunds may also be offset until resolved.

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FAQs About IRS Refund Offsets

Q1: Can the IRS take my entire refund?Yes, if your debt is larger than your refund, the entire amount can be offset.

Q2: Will the IRS notify me before offsetting my refund?Not always before, but you’ll get a notice after the offset is applied.

Q3: Can my spouse’s refund be taken for my debts?Yes, unless you file an Injured Spouse Claim (Form 8379).

Q4: How do I stop future offsets?Pay off or set up repayment plans for debts that qualify for offset.

Final Thoughts

An IRS refund offset in 2025 means the government used your refund to cover debts. While it can be frustrating, it’s not a mistake — it’s part of the Treasury Offset Program. Always read your notice, confirm the debt, and contact the reporting agency if you think there’s an error.

👉 Next: Learn about IRS Code 971 – Notice Issued and how it connects to refund delays.