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Any tax refund can be reduced because a filer owes a debt to the federal or state government or has unpaid child support, said Erica York, an economist with the Tax Foundation, a nonprofit organization that analyzes tax policy.
A refund occurs when a taxpayer has overpaid their taxes during the year or is eligible to receive refundable tax credits that exceed the amount of their tax liability, York said. Through the Treasury Offset Program, the Bureau of Fiscal Service can reduce a tax refund to recover delinquent federal nontax debt, unpaid child support, or state debt, whether from taxes or another obligation. A state debt could include fraudulently claimed unemployment compensation, which would have to be repaid.
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