Will the IRS take my tax refund?

Ask NJMoneyHelp

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Q. I owe the IRS $8,000 from the 2016 tax year. I have an installment agreement that I am making payments on every month. I’m anticipating a refund from my 2018 taxes. Will the IRS require me to use that refund to pay down my 2016 tax obligation? If not, how can I designate that refund towards my past taxes owed?
— Making it right

A. We’re glad you’re working towards paying off your debt to the IRS.

As a rule, the IRS will apply refunds against unpaid taxes even when an installment agreement is in place, said Michael Karu, a certified public accountant with Levine, Jacobs & Co. in Livingston.

“If by some chance they don’t and send a check to you for your overpaid 2018 taxes, you should mail their check back to them with a letter advising that the funds be applied to 2016,” Karu said. “By doing that and not depositing it and writing your own check, the payment gets processed as of the date your return was filed, thereby reducing any chargeable interest.”

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