31 August 2020

What is an Injured Spouse?

When we talk about an Injured Spouse, in regards to a tax return, we are talking about SOMEONE WHOSE TAX REFUND IS USED TO PAY AN OLD DEBT OF THEIR SPOUSE.

How does this work in real life?

Chris marries Shannon in 2019. They file a Married Filing Joint (MFJ) tax return, for 2019. Shannon is expecting to get a refund because that is what happens ever year. But no, no, no. Instead of nice REFUND check, Chris and Shannon receive a letter explaining that their refund as been applies to Chris’ tax debt from 2015.

How is Shannon feeling right now? That’s right, INJURED. Ouch! Shannon has extra withholding taken out every paycheck in order to ensure a nice big refund, but now it was grabbed to be used to pay Chris’ debt.

What Types of Debt Will The IRS Pay With Your Refund?

IRS debt
Most State Income Tax agencies
Federal Student Loans
Alimony
Child Support
Unemployment

What can Shannon do about it? Is there any way out of this jam?

YES! The IRS has a form for this! It is called “Injured Spouse Allocation”, Form 8379. This form allows the injured spouse (Shannon) to request their portion of the refund NOT be used to cover their spouse’s old debt.

Form 8379 can be filed along with the tax return, or by itself.

A few things to note:

A new Form 8379 must be filed every year
This Form does not work for separating a liability on the CURRENT return
The Injured Spouse is only entitled to separate treatment for their portion of withheld taxes
Processing of Form 8379 can take up to 13 weeks, be patient

If you have questions about whether an Injured Spouse claim is right for you, give me a call. Happy to help.

Jeff Roltgen, Tax Rescue CPA
Jeff@TaxRescueCPA.com
www.TaxRescueCPA.com

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