The term “injured spouse” brings to mind a lot of negative connotations, but it probably doesn’t mean what you think it does. In the context of taxes, injured spouse is merely a term used by the federal government to describe someone harmed by a spouse’s past-due debt. More specifically, it means a spouse harmed by losing some or all of the tax refund for a joint return (“married filing jointly” tax-reporting status).
When you get married, you may or may not know your new wife defaulted on her federal student loans years ago, but you probably don’t realize that you could end up paying for her tax liability. When you file a joint return, that shared refund is at stake if either spouse has any government debt.
Let’s discuss what it means to be the injured spouse, the types of debt included, and how to avoid that tax liability and reclaim your portion of the joint refund.
What is injured spouse relief?
Injured spouse relief is a type of tax relief designed so that a person is not held responsible for the debt of a spouse or former spouse. If you owe certain types of debt, such as past-due taxes or outstanding child support payments, federal law authorizes the U.S. Treasury Department to deduct from your federal income tax refund to help settle those debts.
The Treasury Offset Program (TOP) facilitates this. Essentially, TOP matches up your tax return with its list of debtors. If you’re on that list, TOP can collect those delinquent debts owed to state and federal agencies by taking your refund.
Source: U.S. Treasury Department Bureau of the Fiscal Service
If you’re married filing jointly, however, that liability can become a problem for both partners. Even if one of the parties is not personally responsible for the liability, the government can still take some or all of the tax refund to offset the debt. And because this is a joint refund, that might include your portion of the refund , too, unless you file an injured spouse claim.
Simply put, you are considered the “injured spouse” if your partner is solely responsible for the debt and puts your refund at risk of being seized. However, you need to prove the money owed is not your responsibility — because it occurred prior to the marriage, for example. You can do that by filing Form 8379 and requesting relief. This will allow you to get back your fair share of the refund. You could even avoid having it taken in the first place.
The government can’t take your joint tax return refund for just any old debt, but there are a number of circumstances where they can and will if your spouse owes money.
|Here is a list of eligible debts that can impact your tax refund money from a joint return.|
How do I qualify for injured spouse relief?
In order to qualify as an injured spouse, you must have been married at the time and filed a joint tax return. You also need to have reported your income (and any taxes withheld or estimated tax payments) and be expecting a tax refund. Further, there must be the expectation that your spouse’s debt will negatively affect your portion of the refund. If all of those things apply, congratulations: you qualify and can request relief.
How to make an injured spouse claim
To request injured spouse relief, you must file the Internal Revenue Service (IRS) Form 8379 Injured Spouse Allocation. You can file it with your joint return or amended tax return if you suspect ahead of time that your refund will be taken or reduced. You also can file the form separately after your return has already been processed.
Another option is to avoid the situation entirely. How? If you suspect your refund is at risk, you and your spouse can file separate tax returns. In some areas, you may have no choice but to file separate state tax returns if you want to retain your refund. However, there are certain other tax benefits to filing a joint tax return, so keep that in mind as you make your decision.
When to file tax Form 8379
You should file the injured spouse allocation form as soon as you realize that your joint refund has been, or will be, affected by your partner’s past debts. But, as you may not be immediately aware of what happened, you are granted a fair amount of time to make an injured spouse claim.
In order to be considered for an injured spouse claim, you must file Form 8379 within three years from the due date of the original return (including extensions) or within two years from the date you paid the tax that was later offset, whichever is later.
|Injured spouse claim: filing deadlines|
|From the date of return||From the date of tax payment|
|Years to file Form 8379||3||2|
How long does it take?
The federal government is not generally known for its speed. It can take up to three months, give or take, for the IRS to process an injured spouse allocation form, although you can hurry the procedure along by filing electronically.
If you wait until your joint tax return has already gone through before filing form 8379, you could receive a resolution to your injured spouse claim in as little as eight weeks.
How is an injured spouse tax refund calculated?
When you make an injured spouse claim, the IRS conducts an investigation and calculates how much of the joint refund is your fair share. Essentially, the agency will calculate what your tax return would look like if you were married filing separately. Based on this, they’ll run the numbers to find out exactly what taxes you owe personally and if you are due a refund.
Can the IRS deny an injured spouse claim?
Your request could be denied if the IRS decides you are ineligible for the refund. For example, if you live in a community property state, they may rule that you are jointly liable for the debt if it was incurred during the marriage. If you are denied, you can request the injured spouse claim worksheet, which should explain how and why you are not eligible for the refund.
What can you do if injured spouse relief is denied?
If you disagree with the findings, you can appeal by filing Form 12203 Request for Appeals Review, which gives you the opportunity to refute their decision. You usually will have to do this within 30 days from the date of denial.
If your tax debt is too large to deal with all at once, you choose to either negotiate directly with the IRS or hire a tax relief company.
What is innocent spouse relief vs. injured spouse?
These terms are often mistaken for one another, but they describe completely different tax relief programs. What the IRS injured spouse relief program does is protect the “injured” party from being financially liable for past debts incurred by one-half of a couple. Innocent spouse relief, on the other hand, refers to when one spouse falsely reports information on the jointly held tax return, like taking deductions or credits they shouldn’t or failing to report income or assets.
The innocent spouse relief claim is a way to protect yourself if you legitimately have no knowledge or responsibility for a partner’s misrepresentation of taxes owed to the federal, and sometimes, state governments. If the IRS accepts your request for relief, you won’t be held responsible for your spouse or former spouse’s tax liability. To qualify for innocent spouse relief, you must file IRS Form 8857.
Federal vs. state injured spouse claims
While federal income tax laws are standardized, you should check your state laws before making an injured spouse claim. They can vary, and depending on where you live, you could be held jointly responsible for all debts. Even better, learn your state’s laws before you file your joint tax return. Illinois, for one, doesn’t have an injured spouse claim and recommends filing separately if you don’t want to be held financially responsible for your spouse’s liabilities.
Can you file for injured spouse relief if you didn’t work?
No. In order to qualify for the tax relief, you must have reported income on the tax return involved. If you didn’t work, you wouldn’t be paying any taxes and, thus, you’d not be eligible for a refund.
However, if you show some profits earned from investments that are taxed, you might still have a reason to file for relief. To be owed a refund, you will need to have made estimated tax payments during the year in excess of the capital gains owed.
Can the IRS take my refund if my husband owes child support?
Yes. If the outstanding child support was reported to the Treasury Department, the IRS could seize the refund that resulted from the joint tax return. They will then turn it over to the appropriate child support agency for disbursement.
What is a community property state?
You will want to find out if you have a state community property law (as opposed to the more usual “common law”) because this can have an impact on your injured spouse claim.
While state laws do vary, the following states currently have community property laws: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Community property states follow the rule that all assets and debts acquired during the marriage (aside from gifts or inheritances) are considered “community property,” meaning both parties assume the benefits and risks of both.
- The IRS can seize your joint tax refund because of debts owed by only one spouse.
- You are the “injured spouse” if the tax liability is not your responsibility.
- You can file an injured spouse claim if you don’t believe your portion of the refund should be reduced or seized.
- Debts that can be offset by your tax refund include back taxes, outstanding alimony or child support, and federal non-tax debt, such as student loans.
- You will need to file Form 8379 Injured Spouse Allocation to claim tax relief.
Dispelling tax shadows
Marriage should feel like a fresh start in life, but past debts could cast a shadow over your new union. You and your spouse might want to ask each other some tough questions and share your financial picture right from the beginning. But if you haven’t, it’s good to know that injured spouse relief is a solution to a potentially sticky situation.
Injured spouse relief is not the only complexity you might encounter when taking care of your taxes. Whether it’s the Internal Revenue Service or your state’s Department of Revenue you have to contend with, growing complexity will be the rule rather than the exception. SuperMoney provides search tools and real-customer reviews (not marketing copy biased by financial incentives) that can help you deal with the complexities, from assistance preparing your taxes to help finding tax relief.
View Article Sources
- About Form 8379, Injured Spouse Allocation — IRS
- About Form 8857, Request for Innocent Spouse Relief — IRS
- Community Property — Legal Information Institute, Cornell Law School
- Form 8379 Injured Spouse Allocation — IRS
- Form 12203 Request for Appeals Review — IRS
- Instructions for Form 8379 — IRS
- Form 8857 Request for Innocent Spouse Relief — IRS
- How do I apply for injured spouse relief? — Illinois Department of Revenue
- How TOP Works — U.S. Treasury Department Bureau of the Fiscal Service
- Innocent/Injured Spouse Relief and Additional Information — FAQ — Georgia Department of Revenue
- Internal Revenue Manuals Pt. 25, Ch. 18.8, § 1. Basic Principles of Community Property Law — IRS
- Large Gains, Lump Sum Distributions, etc. — IRS
- Relief from Joint Liability (Innocent Spouse Relief) — Pennsylvania Department of Revenue
- Requesting an Appeal — IRS
- Separate Property or Community Property: An Introduction to Marital Property Law in the Community Property State — Baylor University School of Law
- Treasury Offset Program — U.S. Treasury Department Bureau of the Fiscal Service
- What is injured spouse relief? — Illinois Department of Revenue
- Injured Spouse vs. Innocent Spouse — What Is the Difference? — SuperMoney
- What Is Innocent Spouse Relief And How To Qualify — SuperMoney
- Married Filing Separately, Jointly, or Single: Which Filing Status Is Best? — SuperMoney
- Understanding Crypto And Capital Gains Taxes — SuperMoney