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Tackling Injured Spouse Relief

Nov 1, 2019

When a couple decides to tie the knot, they can expect to share many things, including a joint tax return. However, sharing a past due obligation of your spouse shouldn’t have to be one. 

IRC Sec. 6402 provides that the government can offset your refund to pay for your spouse’s obligation. Debt under IRC Sec. 6402 includes past-due federal tax, state income tax, state unemployment compensation debts and child or spousal support payments. You should receive a notice when this has occurred. When this offset occurs with respect to an overpayment shown on a joint income tax return and only one spouse owes the debt, the offset may take a part of the refund belonging to the spouse who is not liable for the debt. This spouse is referred to as an “injured spouse,” who has a right to request a refund for their share of the overpayment.

Injured spouse is often confused with innocent spouse. Innocent spouse is defined as a situation in which the spouses file a joint return and both taxpayers are jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise from the joint return even if they later divorce.

In order to mitigate the effects to the injured spouse, Form 8379, Injured Spouse Allocation should be filed so that he or she may be able to receive their entitled share of the refund.

To qualify as an injured spouse, the claimant must not be legally obligated to pay the past-due amount and must have made and reported tax payments, such as federal income tax withheld, estimated tax payments or claimed a refundable credit.

A Sideline View of Form 8379:

  • Form 8379 needs to be filed for every tax year in which your refund was affected and for which you seek injured spouse relief.
  • Form 8379 must be filed within three years from the due date of the original return (including extensions) or within two years from the date that you paid the tax that was later offset, whichever is later.
  • Form 8379 can be filed with your joint tax return or with your amended joint tax return or it can be filed by itself.
  • An allocation must be made as if each spouse filed a separate tax return instead of a joint return.
  • Not all debts are subject to a tax refund offset. If you live in a community property state, the IRS will use each state’s rules to determine the amount, if any, that’s refundable to the injured spouse. Generally, community property income and deductions are allocated 50% to each spouse unless it is established that they were paid with separate property.

Filing Form 8379 is a viable option for an injured spouse from having all or part of a tax refund applied to a spouse’s unpaid debt. 

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