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How to Prevent a Tax Refund Intercept on a Defaulted Student Loan

Written by Steve Rhode

“Dear Steve,

I recently inquired to see if my defaulted student loan would offset my tax return. The FMS 800 number stated that my tax return may be offset for my debt to the US Department Of Education.

My question is my husband and I file a joint return and we are now in a position to take care of this debt. However, if we try and rehabilitate the loan before we file will our tax return still be offset to pay this debt. I haven’t received any notice in the mail about this offset yet.


Dear Sarah,

Why not get started on rehabilitating your student loan right now and request an extension on filing your tax return. That way the loan should be back in good standing before your return is filed and refund sent.

An automatic extension to file your taxes is available online here. Once you file this, your tax return will be due by October 15, giving you the time to deal with the student loans.

More information on student loan rehabilitation is available here.

Please post your responses and follow-up messages to me on this in the comments section below.


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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • crazy question, but only the loans that are in default can possibly be offset on your taxes. What about the ones that are in repayment status but not in default. Can those be taken out of taxes?

  • Steve – you forgot to mention the “Injured Spouse” form, From 8379. when filing for a joint tax return where one of the couple have defaulted student loan debt the other spouse is not responsible for, this form allows the person who does NOT have student loan debt to collect his portion of the tax return. If this so-called “injured spouse” is responsible for a large portion of the income on the return, the payment from the IRS is just as much as the joint payment, and cannot be levied by the IRS.

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