Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Refund and Amount of Tax Owed

Refund or Tax Due

Offsets

The IRS applies the same bottom-up rule to adjust direct deposits for refund offsets for:

  • Unpaid federal taxes, or
  • If the Earned Income Credit (EIC) portion of the taxpayer's refund is withheld pending further review

After the EIC review, if a refund is allowed, it will be direct-deposited in the account listed first on Form 8888.

Example

Bill asks that his refund of $780 be deposited into three different accounts: $300 into Account 1, $300 into Account 2 and $180 into Account 3.

However, Bill owes federal taxes of $290 from an earlier tax year. After this amount is offset, the balance of $490 will be direct deposited as follows: Account 1 will receive $300, Account 2 will receive $190, and Account 3 will receive $0.

Example

Melanie is due a refund of $1,000; $700 of the refund is an Earned Income Credit. She asks that her refund be split into three different accounts: $500 into Account 1, $300 into Account 2, and $200 into Account 3. Melanie's EIC amount of $700 was held pending a review; $300 went to Account 1 and $0 went to Accounts 2 and 3. Later, when the IRS allowed her EIC refund amount, it was deposited into Account 1.