A number of issues arise when you marry a person who has an IRS tax liability. A common problem is that the IRS may begin keeping your annual tax refund to pay your spouse’s tax bill. Fortunately, the IRS Injured Spouse Relief program provides a fairly simple solution to this problem.
This issue arises when a married person files a joint federal income tax return with their spouse. If the spouse has a tax liability, the IRS will most likely keep any available tax refund and apply it to the spouse’s past due liability. Many people attempt to avoid this problem by filing separate returns. Unfortunately, this solution may cause the couple to miss out on some important tax advantages.
Another solution is to complete and file IRS Form 8379, Injured Spouse Allocation, at the time you file your joint form 1040 tax return. The IRS will use the Injured Spouse Form to determine what portion of the refund should be allocated to the spouse without the tax liability. The IRS may then refund the appropriate funds to the non-liable spouse and apply the remaining refund to the liable spouse’s past-due tax liability.
According to the IRS, to qualify for Injured Spouse Relief, the following conditions must apply:
- You must not be legally obligated to pay the past-due tax;
- You must report income such as wages, taxable interest, etc., on the joint return; and,
- You must have made and reported payments, such as federal income tax withheld from your wages or estimated tax payments, or you claimed the earned income credit or other refundable credit, on the joint return.
Injured Spouse Relief may not solve all of the issues that arise from being married to someone with an IRS tax liability. However, it can provide some needed relief. A knowledgeable and qualified tax return preparer should be able to guide you thorough the Injured Spouse Relief process.