Deadline Extension to File Tax Refund Could Help You Avoid Tax Garnishment
As more changes and updates emerge in response to the coronavirus crisis, the IRS has announced an extension and new deadline to file tax refunds from April 15 to July 15, 2020. The extension will automatically be applied to all filings, and no further action or documents are necessary.
The Education Department will also not withhold tax refunds due to defaulted federal student loans for 60 days from March 13.
If you’re currently in default on your federal student loan, this additional time is an opportunity to avoid possible tax garnishment later. When you haven’t made a payment on a federal student loan for several months, the Department of Treasury is entitled to withhold a portion or all of your tax refund to pay the debt you owe, as part of the Treasury Offset Program (TOP). In some cases, you can avoid tax garnishment by calling a TOP debt recovery analyst and discussing your financial situation or arranging a repayment plan.
We encourage you to use this time to your advantage. If you expect your taxes to be garnished or have already received an offset letter, please contact one of our MES advisors before the July 15 deadline to discuss your options and begin to pay down your student loan debt.
Sources: (as of March 27, 2020)