Posted by The TaxAdvocate Group, LLC

How to Avoid Entering the Tax Garnishments for Student Loan Payments

How to Avoid Entering the Tax Garnishments for Student Loan Payments

One of the consequences of the late payment of the federal student loan is that a tax refund cannot be obtained. And if you are married, it can affect your spouse. However, if you are struggling with your finances, there are a few steps you can take to challenge the tax refund embargo.

When Can The Government Garnish My Student Loan Payments?

The government can tax repayments after any federal debt has become unpaid, including student loans. Your loans are delinquent when you are more than 270 days late. Depending on the amount due and the amount of the reimbursement, the government may withhold part or all of the refund.

The government will not allow you to reimburse fees if you are late for private student loans. However, other consequences, such as increased loans and deteriorating personal credit, may be encountered.

How To Know If You Have A Student Loan Refund Offset?

The Treasury Department Bureau of the Fiscal Services (BFS) will send an offset notice at least 65 days before the tax deadline, usually in the fall. The notification must indicate:

    •    An initial amount of tax refund.

    •    How long it is withholding.

    •    The agency that receives offset.

    •    Agency's contact details.

How You Can Prevent The Government From Taking Your Taxes Due To Student Loan?

After receiving a notification, you have 65 days to request an account review. You can successfully challenge tax offset if:

    •    You have already paid student loans.

    •    Currently, payments are made based on a payment contract.

    •    There are loans from someone else with an error on your behalf.

    •    You are currently bankrupt.

    •    Your loans were canceled during bankruptcy.

    •    Your loans are eligible for discharge due to disability, death, school closure, identity theft, or your school does not comply with federal law when granting loans.

    •    You are having financial difficulties.

It is possible to contest the tax refund by sending the request for revision to the Treasury remuneration form or by contacting the BFS call center. 

You can also contact the student loan administrator to find out how to challenge the guarantee, especially in the event of financial difficulties.

How To Fill The Tax Offset Hardship Refund Form

If you think you are eligible for tax exemption due to financial difficulties, contact your administrator to request a form, complete, and submit the form. You can benefit from an exemption if:

    •    Your Utilities Have Been Closed: In the past three months, send an alert from your service company that your utilities have been disconnected or stopped and how much you need. Have Exhausted Your Unemployment Benefits: Submit a notification that you are no longer entitled to unemployment benefits even though you do not have a job.

    •    Facing Foreclosure: submit a court notice that was issued by a court in the past three months, stating how much you owe.

    •    Facing Eviction: Send a notice of evacuation in the past three months to your rental agency or to the owner of your building loan who signed an employee and indicates how much you owe.

    •    You Have No House: The administrator may ask you to provide a temporary address to contact you until you have permanent contact information.

Generally, you only need to provide contact details, social security number, and check off the type of exemption for which you are eligible. Once the request is signed and dated, follow the administrator's instructions to send the form and all relevant documents by mail, fax, or e-mail.

The administrator can take up to 30 days to process your request. If approved, it is still not possible to receive a full refund, depending on the details of your financial situation. You can only get approval for reimbursement of customs clearance difficulties once.

Will My Spouse's Tax Refund Be Affected?

Spousal tax refunds can also be paid if you are married and file a joint tax return. However, you can avoid this by submitting the IRS 8379 form, also known as the Injured Spouse Attribution Form. You can send it with tax returns, or your spouse can address it separately.

Ways to Avoid The Tax Exemption On Student Credit

If you feel you may be delaying paying off a federal student loan, there are several things you can do to avoid getting tied up in the tax refund.

Please pay Attention: It is essential to guarantee student loans on time to avoid non-payment and, therefore, tax offset. You can facilitate this by signing up for automatic payment through your administrator; usually, it has a 0.25% reduction in the interest rate. You can also budget for yourself if you're having trouble getting funds when they expire.

Stay In Touch With Your Administrator: The administrator is the company that manages student loan payments. They might have ideas on how to track student loans that you couldn't have found on your own.

If you are having problems with your refunds or think you may be able to do so in the future, contact customer service to find out what your options are.

Request A Referral Or Favorable Treatment: Federal loans offer several options for suspending student loans to avoid defaults. It is a useful option if you are going back to school if you recently lost a job, if you are inactive military service or if you have a short term when your money is low.

Modification Of Payment Plans: Do you have trouble with endless payments at a glance? Consider changing your payment plan. Federal student loans have many options, including some income-based payment plans, depending on the amount you earn to make sure your payments are something you can afford.

Consider Consolidation: You can cancel the board by applying for a federal direct consolidation loan. This means getting a new student loan to pay off your current loans, including those you haven't paid for. You can choose a new payment plan, administrator, and get an interest rate, which is a weighted average of the rates you have.

Obtain Student Loan Rehabilitation: Another way to get out of default is to apply for the recovery of the student loan. The rehabilitation implies the acceptance of nine reimbursements in 10 months with a delay not exceeding 20 days. They fee you pay depends on your income. You can start rehabilitating federal student loans by contacting the administrator.


One of the consequences of defaulting on student loans is the loss of tax refunds. There are several ways to recover a partial or full refund in the event of serious financial problems. And if you are considering your loans, there are a few things you can do to prevent BFS from sending you the tax clearing notification first.

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