Federal student loan defaults can result in tax refund garnishment through the Treasury Offset Program (TOP). After September 2024, the government can resume taking tax refunds to cover defaulted federal student loans, as pandemic-related relief measures expire.

Federal student loans enter default after 270 days of missed payments. Once in default, your loan holder will notify you via a tax offset notice before seizing your refund, giving you time to take action.

Ways to Stop Tax Refund Garnishment:

1. Prove debt repayment

• Submit copies of payment receipts, checks, or money orders
• Dispute incorrect offset amounts with documentation

2. Demonstrate loan discharge eligibility

• Provide discharge applications or court documents
• Valid reasons include bankruptcy, permanent disability, or school fraud

3. Show existing repayment agreement

• Submit copy of agreement and payment proof
• Must make payments within 65 days of offset notice

4. Request hardship relief

• Document circumstances like unemployment or foreclosure
• May require entering rehabilitation or repayment plan

Important Deadlines and Rights:

• 65 days to contest offset notice
• Can stop offset by making 5 of 9 required rehabilitation payments
• Married couples can protect spouse's portion using IRS Form 8379 (injured spouse allocation)

If garnishment occurs, contact your loan holder about potential refund recovery. To prevent future garnishment, consider loan rehabilitation or consolidation to bring loans back into good standing.

State tax refund garnishment rules vary by location. Check with your state's taxation department for specific guidelines.

Remember:

• Only federal student loans are subject to tax refund garnishment
• Private student loans cannot trigger tax refund seizure
• Keep loan holder contact information updated
• Check loan status at studentaid.gov

Getting ahead of potential garnishment by addressing default is the most effective strategy for protecting your tax refund.

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