Injured Spouse relief is available for married taxpayer who wants to enjoy the benefits of filing a joint return without having to worry about having that benefit wiped out by their spouses's pre-existing debts.
The common perils of filing a joint tax return
If you're married, you are probably aware that filing a Joint Return with your spouse will result in your being Jointly and Severally liable with your spouse for items that are incorrectly reported on the return. Not only will you be held liable for items of income or expense not handled correctly on the return, but signing a return will also result in you being liable for any tax due as shown.
If your spouse tells you that s/he will pay the tax due but then does not, you're on the hook by default. And you aren't just on the hook for your portion of the tax, you are on the hook for the entire amount.
The prospect of joint and several liability is one reason that some professionals will recommend that you file as married filing separately. The problem is that you will almost always end up with a higher tax bill if you choose this filing status. So, some tax preparers will go to great lengths to maximize the benefits of deductions, exemptions, and credits available to married taxpayers without discussing the liability issue at all.
If you were blind-sighted by a deceptive spouse and left on the hook for what was essentially your spouse's tax liability for a year that you signed a joint return, innocent spouse relief or equitable relief from joint and several liability might be available for you.
Injured Spouse Relief is different than innocent spouse and equitable relief. The remainder of this article will address a separate issue that can arise when married taxpayers file a joint return. When your spouse already owes a debt to a state or the federal government, then your federal refund could be subject to levy (garnishment).
The good news is that the IRS has policies in place for married taxpayers to protect their individual portions of a refund on a joint tax return. Form 8379, Injured Spouse Allocation, can be filed with a joint return to prevent the full levy or garnishment of a joint refund in the first place. However, even if the entire refund was garnished for a debt owed solely by your spouse, you can still file a claim for refund after this occurs. The process of making either request (up front, or after the levy) can be difficult for a taxpayers to pursue on their own.
The IRS is required to refund your share of any tax overpayment that was levied to pay previous debts owed solely by your spouse. We know the ins-and-outs of the IRS procedures and always make sure that the injured spouse gets the entire portion of the tax refund that they are entitled to receive.
The bottom line is this: don't file Married Filing Separately simply because your spouse is individually liable for unpaid taxes or other past due debts. You shouldn't be forced into the situation of choosing between a higher tax bill or the loss of your entire refund, and the fact is that you aren't required to make that choice.
However, although Injured Spouse Relief is available for these exact situations, you need to be proactive to take advantage of this type of relief. If you already filed a joint tax return, and your refund was levied, you may still have the chance to get your share of that refund back.
If you have a tax matter that you need assistance with, contact us. We can help. Call us at 888-727-8796 or email info@irsmedic.com.
