If you did not itemize deductions on your federal tax return last year, do not report any of the refund as income. In general, state and local income tax refunds are taxable if the refunded tax was deducted in a prior year and you received a tax benefit from the deduction.

Do I get money back from federal withholding?

If you’ve paid more in withholding than you owe in taxes for the year, the IRS sends you a refund of the difference. If you didn’t have enough money withheld from your check, you owe the IRS.

What does last year no federal taxes were withheld from my paycheck mean?

If no federal income tax was withheld from your paycheck, the reason might be quite simple: you didn’t earn enough money for any tax to be withheld. Your filing status will also change the way your taxes are withheld.

What to do if your state tax refund is withheld?

If your refund was withheld or reduced for a state tax debt, the name and address will likely be your state tax agency. If you think your federal tax refund may be withheld to pay delinquent or past due state taxes, you can contact your state taxation office to find out how much will be withheld.

Can a federal agency hold back your tax refund?

The same federal agency that issues tax refunds, the U.S. Department of the Treasury, also has the authority to hold back all or part of your refund to repay debts that you may owe. This is done by the department’s Bureau of the Fiscal Service. In bureaucratese, it is known as an “offset.” 1 

When do you get a tax refund if you are exempt?

The IRS will issue tax refunds when you have overpaid. You receive this money only because you have paid more than what you owe. When you file for an exemption from withholding, you are not making any tax payments throughout the year. And since you are not paying any taxes, you typically will not qualify for a tax refund.

How does the federal government use your refund?

If you owe money to a federal or state agency, the federal government may use part or all your federal tax refund to repay the debt. This is called a tax refund offset. How the Treasury Offset Program Works