Reconsolidating federal student loans
If you choose not to take action, miss the deadlines to take action, or never received a letter warning you of the proposed tax offset, the IRS will take your tax refund.Thankfully, you’re not completely out of luck at this point.
If you have federal student loans that are in default, you may receive a letter in the fall notifying you that the IRS plans to take your potential tax refund and apply it to your education debt. If anything looks incorrect, you have the right to request a review hearing, where you’ll have the opportunity to prove that your taxes should not be offset.However, it is possible to get your spouse’s portion of the refund returned to him or her.It’s important to note that, because there is no statute of limitations for federal loans, the IRS can offset your taxes for every year your federal student loans are in default. First, check all the information in the letter against your records and your loan accounts.But for those who have defaulted on their federal student loans, their potential joy can be seized by the IRS to pay down the federal debt.
It may not currently be tax season, but it’s never too early to start preparing to secure that refund.Note: Stopping tax offsets takes 6-9 months for most people.