Yes, but it’s a lot less common than you’d think. Odds are, unless you owe back taxes, child support, or student loans, you’re tax refunds will be safe.
However, remember that it is very, very easy to garnish your bank account. So if your tax refund goes into your bank account and sits there, your creditors may be able to get it easily. It would be safer to have HR Block put it on one of their debit cards, or have it deposited into your parents’ account.
1. Back taxes — If you owe back federal taxes, then the IRS will do an offset. You can’t stop this (unless you file bankruptcy, and even then, they may process the offset anyway). If you do file bankruptcy before the offset, the trustee gets your refund. If you owe state taxes, then the state taxing authority can do an offset.
2. Student loans — If you owe Federal student loans, like Stafford loans, then they can garnish your federal return, same as the offset above. If you owe state student loans like UHEAA, then they can garnish your state return, same as the offset above.
3. Child support — If you are behind on child support, it is very easy for ORS to garnish state and federal returns.
4. Judgment creditors — If a creditor has a judgment against you, they can jump through a large number of hoops to try to serve a writ of garnishment on the state or federal Department of Treasury, but it’s very rare. (A judgment creditor is a creditor who has already sued you in court and received a judgment against you).
5. Creditors without judgments — They cannot garnish anything. They don’t have a judgment yet.
In most cases, your refund is going to be safe unless you owe the big three above (taxes, student loans, child support), and you’ll want to wait to file your bk until after you receive the refund.