If I owe state taxes for 2005, does it delay my federal refund for 2006?

Question

i have a past due for maryland state tax of about $800 that i haven't been able to pay (tax year 2005, filed in feb of 2006). is that what an "offset" is? this year i'm getting back $4000 from federal and owe maryland $100. i did an e-file through HR Block on feb 26, 2007. the IRS website says it should've been direct deposited on march 9, 2007 but still haven't gone in to my account. i'm guessing it's because of the $800 i owe for tax year 2005. is that what's causing the delay?

can someone explain to me in plain english what's going on. i don't know anytihng about this stuff. are they going to deduct $800 of my $4000 return this year to pay for last years state tax i owe? being that i should've gotten the refund already (except for the fact that i owe for last year), how long does this delay the refund process?

Answer 1

Well I will say that when you e-file and want direct deposit it can take between 8-15days. Since you filed on the 26 of February, today is actually the 15th day, but I don't know if H& R Block files straight away or if they go back and double check your return like some other tax preparation services. If they do then that will make your refund come a little later. Also if they we supposed to deposit on the 9th which was a Friday, that may be set off by the weekend.

The CPA that I work for said that normally they do not take past year State balance dues out of the Federal refund. If you were getting a refund this year from MD then they would take your balance due from last year out of this year's refund from state. There is a separation between state and federal.

If you can't pay for last year's balance due, which by now the government is probably charging you interest on since they penalize you for money you owe them, you may want to contact your local tax commission or tax agency and set up a payment plan. As with federal balance due returns you can set up payment plans per month so you don't have to pay a large lump-sum amount in a short amount of time.

Answer 2

I live in South Carolina and have had my state refund kept before for having a balance that I owed but never federal. I don't believe a state can keep your federal money. You may want to check with HR Block.

Answer 3

I can show you what helped me the most this year. I found a site that actually paid my filing fees for me. I went through their steps (which took about 30 minutes) and they paid all of my filing fees back to me. They also informed me that, if I had owed the IRS instead of getting a return, that they would have paid up to $500 of my taxes for me. I hope that they offer the same incentives next year so that I can file for free again... Check them out to see how much money that they can save you.

Answer 4

your debts will keep on accumulating and your children will inherit your debts, but you do not lose any privileges, you can only be refused in bank loans if your debt is too high