What do you do if you filed a joint tax return with your spouse, and the refund is applied to your spouse's back taxes? Tax refunds are commonly applied to past-due taxes for state or federal authorities, or to back child support or spousal support payments. They can even be applied to outstanding student loans. If your spouse has some of these debts and your money is seized to pay for them, what recourse do you have?
This situation has a name and a remedy, and it is known as injured spouse relief. The following is a summary of what the IRS wants people to know about applying for this relief:
1. To be eligible for injured spouse relief, you need to have made your tax payments or claimed tax credits, and you need to have no obligation to pay any part of your spouse's debt.
2. There are special rules that apply in community property states. (Orange County tax attorneys point out that California IS a community property state). IRS Publication 555, available at irs.gov, explains the factors at work with community property laws.
3. If you filed jointly and you are entitled to part of the refund, and not responsible for the spouse's debt, you can file Form 8379, Injured Spouse Allocation.
4. You can file Form 8379 with your return, or later when you find out that your refund has been applied to your spouse's debt.
5. Form 8379 can be filed electronically. If you file a paper copy with your return, write "INJURED SPOUSE" at the top left corner of your 1040.
6. If you file Form 8379 later, you have to include your and your spouse's Social Security numbers. You have to sign the form if you are the injured spouse.
7. Form 8379 is not for innocent spouse relief. Innocent spouse relief uses Form 8857, Request for Innocent Spouse Relief.
You can visit irs.gov for more information on injured spouse relief (and innocent spouse relief, if you suspect that is the relief you require).
Source: irs.gov "Seven Facts about Injured Spouse Relief" 3/25/2011