Have a Tax Question? Ask a Tax Expert
The Treasury Offset Program is a centralized offset program, administered by the Bureau of the Fiscal Service's Debt Management Services (DMS), to collect delinquent debts owed to federal agencies and states (including past-due child support).
Fiscal Service disburses federal payments, such as federal tax refunds, for agencies making federal payments (known as "payment agencies"), such as the Internal Revenue Service. "Creditor agencies," such as the Department of Education, submit delinquent debts to the Fiscal Service for collection and inclusion in TOP and certify that such debts qualify for collection by offset (taking it from the federal refund).
Your judgement amount would not qualify unless it was for support.
If your judgement was based on a theft then you could claim a loss of the amount on your tax return.
A theft is the taking and removal of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and must have been done with criminal intent.
You would use form 4684.
In the real world yes, you and I both know that is a kin to stealing but for tax purposes no.
The IRS says you do not deduct that kind of bad debt because you are not required to include it in your income (you never got the income so there is nothing to deduct).
Now if this was business and you are on accrual basis (where you count income as income when you bill and not when you are paid) you deduct the amount from your business filing.
I would suggest you look to alien on their property (if they have anything).
In your situation form 4684 does not apply but you can get it on this link
That is legal. I could really only advise about the tax part you asked (wanting to know if you could attach their refund).
A lien can take time and different states have different laws regarding the placement of liens.
You should speak with the clerk of court where you received the judgement. They can most likely give you the proper paperwork for the county and tell you what to attach (the proof of the amount owed).
I will send your post to customer support.
I personally have received nothing from our time discussing your situation.
I wish you only the best.
Please advise if you need more information as your question came back on open list