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Regular Contributor
HectorVictorious
Posts: 111
Registered: ‎07-11-2013
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Loan Rehabilitation and Tax Returns.

Hello!

 

I am 6 months into my student loan rehabilitation..  Every year since I went to school, I have had my taxes garnished to pay toward my student loans...

 

Can anyone give me a best guess or share their experiences on if they will take my tax returns even during my rehabilitation, or will I need to finish the rehabilitation before I am free of them garnishing my taxes???

 

Thanks,

 

Hector


Starting Score: 503
Current Score: 591
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Regular Contributor
scvbd99
Posts: 200
Registered: ‎02-22-2013
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Re: Loan Rehabilitation and Tax Returns.

[ Edited ]

HectorVictorious wrote:

Hello!

 

I am 6 months into my student loan rehabilitation..  Every year since I went to school, I have had my taxes garnished to pay toward my student loans...

 

Can anyone give me a best guess or share their experiences on if they will take my tax returns even during my rehabilitation, or will I need to finish the rehabilitation before I am free of them garnishing my taxes???

 

Thanks,

 

Hector


1st, before you do anyting, call this number: (800) 304-3107

 

It's the Dept of Treasury automated number that will tell you EXACTLY who might be offsetting your tax returns.  

 

Write down that information first, so you know exactly who is controlling the offset.

 

Next, how many different loan holders or collection agencies are handling your default?  If it's just 1, then when you call the number I gave you, it should state that 1 only (or none if you lucked out and got a nice agency that will lift offsets prior to full completion of rehab).  If more than one loan holders ore collection agencies are handling your default, then the 800 number might list more. 

 

Every loan holder/collection agency has different policies regarding whether or not they contact the Dept of Treasury to lift your tax return offset.  

 

As an example, I had 2 different loan holders/collection agencies controlling my loans when I rehabbed:  ECMC, and Sallie Mae.  

 

- ECMC sent notifcation to the Dept of Treasury to lift my tax offset the instant that I signed my rehab agreement with them

- Sallie Mae would only notify the Dept of Treasury to lift the offset after I had made 4 on-time rehab payments.  

 

Again, every agency is different with their policies.  No matter what, it takes 2-4 weeks for the loan holder's/collection agency's notifcation to the Dept of Treasury to go through.  As soon as you can call that 800 number, and it says that nobody is offsetting your taxes, then you're good to go.

 

Let me know if you have more questions.  

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Regular Contributor
scvbd99
Posts: 200
Registered: ‎02-22-2013
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Re: Loan Rehabilitation and Tax Returns.

Also, and I can't stress this enough, but if you know for sure that you're owed a return (i.e., you owe ZERO to the IRS), then you don't have to file your taxes.  You have 3 years to file past taxes and STILL collect your tax return from them.  

 

Again, if the IRS owes you a tax return, you do not have to file. 

 

Think of it this way.  If the IRS owes you a refund, and you don't file it, then that money becomes an INTEREST FREE LOAN for the US Government.   They will be in no hurry to get you to file.  LOL.  

 

I was in default from 2010-2013.  I knew that if I fled my tax returns during that time, they would automatically be offset.  So I chose not to file.  When the 2 agencies handling my rehabiliation in 2013 notified the Dept of Treaury to lift my offsests, I filed my 2010, 2011, and 2012 taxes all at the same time, and got returns for each of them.  In fact, I messed up on my 2011 1040A, and the IRS caught it and INCREASED my refund.  

 

In short, if your taxes will be offset ( call 800-304-3107 to find out), then wait to file until you are completely rehabiliated and your loans have been picked up by a new lender.  

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Regular Contributor
HectorVictorious
Posts: 111
Registered: ‎07-11-2013
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Re: Loan Rehabilitation and Tax Returns.

SCVBD99,

 

You are a genius.  I hope that everyone reads this who is going through the same situation that I am.  I would have never thought about waiting to file my taxes.  I would have had refunds from 3 years if I had thought about that.  I appreciate all this info. You've helped me greatly.

 

~Hector


Starting Score: 503
Current Score: 591
Goal Score: 700


Cards: First Progress Secured Card $600.00; U.S. Bank Secured Card $500.00

Goal: AMEX Rewards Card, Purchase House by the end of 2014
Regular Contributor
scvbd99
Posts: 200
Registered: ‎02-22-2013
0

Re: Loan Rehabilitation and Tax Returns.

Thanks.

 

But make sure to find out who, exactly, is offsetting your taxes by calling that 800 number I gave.  

 

If it's only the people doing your rehab, then they might have a policy to lift the offset after a certain number of payments.  It's a good idea to call them and find out their policy.  

 

||| USAA Visa, $6000 ||| USAA Amex, $5000 ||| Amex BCE, $3000 ||| Chase Freedom, $2000 ||| Cap1 Quicksilver, $2000 ||| Discover It, $1500 ||| TU FICO: 738 ||| EQ FICO: 719 ||| EX FICO '08 : 718
Regular Contributor
HectorVictorious
Posts: 111
Registered: ‎07-11-2013
0

Re: Loan Rehabilitation and Tax Returns.

So I called the Automated number and it said that my Tax refund may be offset by the US Department of Education.  It gave me the number to call them.  This probably means that if I filed my taxes now; even though I am going through rehabilitation with their collection agency, I will not be getting my refund, correct?  Also it said when I pressed 1 that an amount of $1713 was credited to US Department of Education on April 19th 2013 for last year.

 

Also, I get your point about not filing taxes til next year, but do I have to wait a full year, or could I file in June when the rehab is compete?

 

Again, thanks for pointing me in the right direction.  I'll be calling them tomorrow.


Starting Score: 503
Current Score: 591
Goal Score: 700


Cards: First Progress Secured Card $600.00; U.S. Bank Secured Card $500.00

Goal: AMEX Rewards Card, Purchase House by the end of 2014
Regular Contributor
scvbd99
Posts: 200
Registered: ‎02-22-2013
0

Re: Loan Rehabilitation and Tax Returns.

Did you file your 2012 taxes last march/april?  If so, then it sounds like they did indeed take your tax return on April 19th.  

 

I'm betting that on around January 30th of this year, the message you get from the 800 number will change and tell you either (1) you will be offset by "x" organization if you file your 2013 taxes or (2) you have no offsets (which would mean you're good to go to file).  The IRS doesn't begin processing 2013 taxes until January 30th of this year.  Try calling the number again at that time, and it will probably be in sync with the 2013 tax season, and reflect whether or not you have somebody offsetting your 2013 taxes.  

No matter what, if the number says that any entitfy has a current offset on you, you're not safe to file your taxes.  You want it to say something like "we have no record of any offsets" when you call it.  

 

||| USAA Visa, $6000 ||| USAA Amex, $5000 ||| Amex BCE, $3000 ||| Chase Freedom, $2000 ||| Cap1 Quicksilver, $2000 ||| Discover It, $1500 ||| TU FICO: 738 ||| EQ FICO: 719 ||| EX FICO '08 : 718
Regular Contributor
HectorVictorious
Posts: 111
Registered: ‎07-11-2013
0

Re: Loan Rehabilitation and Tax Returns.

Wonderful.  I will keep my fingers crossed and give them a call on the 30th to see if I indeed have an offset this year.  Next week will make the 6th payment of my rehabilitation, and I can't wait for it to be all over and for me to be current for the first time ever.

 

Thanks again SCVBD. You've been a huge help.


Starting Score: 503
Current Score: 591
Goal Score: 700


Cards: First Progress Secured Card $600.00; U.S. Bank Secured Card $500.00

Goal: AMEX Rewards Card, Purchase House by the end of 2014
Regular Contributor
HectorVictorious
Posts: 111
Registered: ‎07-11-2013
0

Re: Loan Rehabilitation and Tax Returns.

So I just called the Department of Treasury again today to see if my Tax would be offset.  They still have the Department of Education listed.  This is sad because I am on the 7th of 9 payments in my rehabilitation. I called the company that is offsetting my taxes and she seemed like she didnt know anything about it.  Tax season ends roughly around the time that my Rehab program ends.  If my rehab ends before tax season ends should I apply, or should I still wait until a following year. 

 

Another question is:  If I do not file my taxes, would this stop me from getting a mortgage for a house? Don't you have to show tax information when applying for a mortgage? I was planning to purchase a house this year.


Starting Score: 503
Current Score: 591
Goal Score: 700


Cards: First Progress Secured Card $600.00; U.S. Bank Secured Card $500.00

Goal: AMEX Rewards Card, Purchase House by the end of 2014
Valued Contributor
IOBA
Posts: 2,667
Registered: ‎08-13-2009
0

Re: Loan Rehabilitation and Tax Returns.

You should be fine when purchasing a house.

 

The mortgage company will have you sign a form that gives them permission to verify with the IRS your last three years worth of tax returns/income.  You can file your taxes just prior to applying for a mortgage or after your rehab is finished and you verified the tax return is not going to be swiped by the collection agency.


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