Missouri participates in the Federal Offset Program. This means if you owe back child support or back taxes, or you are delinquent on certain federal or state obligations, such as student loan payments, you and your spouse may find your Missouri state tax refund withheld to pay those debts.
Federal Offset Program
The Federal Offset Program is administrated by the Financial Management Services, or FMS, division of the Department of the Treasury. The program was created to act as a central collection agency for recovering certain debts owed to federal and state agencies. One of the primary means utilized to collect these debts is by withholding both federal and state income tax refunds and rerouting these refunds to the FMS. The FMS tracks and pays the debts.
Married and Filing Separately
If you file a separate Missouri state income tax return, your refund is safe from being used to pay off your spouse's debts; however, you may sacrifice valuable tax advantages associated with filing a joint return. If you choose to file a separate return, remember to allocate deductions to the spouse who can best benefit from the tax reduction. An experienced tax preparer is your best line of defense for maximizing your tax savings.
Married and Filing Jointly
The greatest risk of losing your refund to the debt of your spouse comes with filing a joint Missouri tax return. Left unchallenged, the state will send your refund to the FMS to pay debts owed. Fortunately, you do have options. On the Missouri tax return, find the non-obligated spouse checkbox. By placing a check in that box, the state will allocate your refund separate from your spouse. The spouse's portion of the refund will go toward paying the debt, and Missouri will send you a check or direct deposit your portion.
The term "non-obligating spouse" means you are married to someone who owes federal or state debt, but you are not legally obligated, or responsible, to pay that debt. If you are unsure whether you are jointly obligated to pay certain debts, such as delinquent tax debt, consult with a legal or tax professional, or call FMS. The FMS can direct you to the agency where the debts are owed.