Is there a way to file income tax & get refund while having a defaulted student loan?

Question

People with defaulted student loans usually have their income tax return confiscated. However, this confiscation by Sallie Mae & assorted low life collectors, are never applied to the defaulted loan. Thus, this may be the 3rd year I have not filed Federal taxes. Does anyone know a way out of this morass?

I also am a Vietnam Era Veteran, who is presently battling the Veterans Administration over my duly earned benefits.

Answer 1

As a taxpayer, I suggest you pay back what you owe. You are only compounding the problem and the penalties will increase. Who do you think the victim is in your scam?

Answer 2

No, if your loan has been turned over to FMS for collection there's no way to avoid having your refund confiscated.

It's a bit late now. The way "out of this morass" as you put it was to pay your loan payments when they were due.

If you didn't file your Federal taxes, the refund that wasn't paid couldn't be confiscated so therefore your debt could not be reduced. Eventually the IRS will file a return on your behalf and any overpayment will be applied against your liability. However in the interim, interest will continue to accrue. If you're REALLY unlucky, there will be a tax liability from the years that you didn't file and the IRS will then go after you for THAT as well.

Get your head out of your @$$ and file the returns for the years that you've missed. Take the hit on the refunds going to Sallie Mae, at least your debt will start to decline! You're the one who fooked up; you're the only one who can fix it now.

I thought that they didn't do college courses in Underwater Basket Weaving any more. Seems that that's about all that you got out of it....

Answer 3

Nothing has been applied to your Student Loan debt, because you haven't filed the returns, You have 3 yrs from the due date of the return to be eligible to claim that refund, otherwise the overpayment goes into the general fund, You don't get it, student loan doesn't get it, it is just gone, File those old returns, at least something will get paid towards the Loan and you will be that much less in debt to them. Then start making payment on it contact the lender and get back to business, you signed a legal binding agreement that you would pay it back, that is your responsibility. They paid for your education you owe that money back. Once you start making timely consistant payments they might lift the garnishment and allow you to start receiving refunds in the future. By you not paying on your loan you are destroying your credit history, No one is going to want to loan you money when you have a record of not paying on your debts as promised.

Answer 4

I has a similar situation. There is no way to keep the goverment from taking the money you owe them. (you can't let someone you owe money to hold your money throughout the year). When the refund does get taken away...you will get a letter from the IRS stating that they withheld your refund and applied it to your debt. Provide a copy of this letter to the credit bureaus and the creditor to make sure it is actually applied.

More important here is "Why are you getting a refund?". If you get a refund at the end of the year that means that your tax witholdings are incorrect. You get a refund because you're allowing your employer to withhold too much tax from your paycheck. So in essence, you're lending the goverment your money interest free. That's nice of you. You have to adjust your witholding so that you don't get a refund....instead you get to keep more of your money every payday. That way there also is no refund for them to keep. Hope this helps you.