If your spouse owes back taxes, the IRS can and will keep any future tax refunds they’re due to pay their tax debt. Unfortunately, your refund can also be applied to other past-due obligations of your spouse even if the debt accrued before you were married and you’re not liable for the debt. This applies to tax debt, back child support or alimony, and federal student loan debt.
To mitigate this situation, the IRS allows you to file for injured spouse relief. This allows the spouse who does not owe back taxes “to get back their share of the joint refund when the joint overpayment is applied to a past-due obligation of the other spouse” using Form 8379. As the injured spouse, your portion of the refund includes the employer withholding or estimated tax payments you made throughout the year, as well as your portion of any joint credits you’re eligible for as a couple.
Making an Injured Spouse Claim
Before submitting Form 8379 for Injured Spouse Allocation, you must determine if you’re eligible. The debt cannot be in your name. You must be expecting a refund, which means you earned an income and overpaid taxes throughout the year. This refund either was, or will be, applied to your spouse’s federal debt.
Eligibility may be different in states with community property laws, including Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Community property laws are designed to make divorce easier by evenly splitting a couple’s assets. However, this may also impact injured spouse relief, because federal debt may be considered community (joint) debt, regardless of who the debt belongs to, if it was incurred during the marriage. If you live in one of these states for at least part of the year, the IRS will determine your eligibility based on rules specific to your state.
When submitting Form 8379, you’ll need to divide your income, deductions, and credits as if you were filing tax returns separately. This helps the IRS determine how much of your refund as a couple is due to you and how much can be applied to your spouse’s back taxes. If you know your refund will be applied to your spouse’s federal debt, you can submit Form 8379 with your tax return with “Injured Spouse” written in the upper left corner of the first page of your return. If you use this method, the IRS will typically process your claim within 14 weeks when filing via paper. If you file electronically with your tax return, the IRS will process the claim in about 11 weeks. You can also submit Form 8379 after your tax return has already been filed. This will likely be the case if you weren’t expecting to have your refund allocated toward a federal debt. If you and your spouse find yourselves in this situation, you can mail Form 8379 with all applicable Forms W-2 and 1099 to the same IRS Center you submitted your original tax return.
Regardless of how you submit Form 8379, it must be within three years of the tax return due date or within two years of paying taxes applied to the debt, whichever is later. You’re eligible to claim injured spouse relief every year your potential return is impacted by your spouse’s tax debt. However, it is possible for an injured spouse claim to be denied. Working with a tax professional can help you claim any and all relief your family is eligible for.
Injured Spouse Relief vs Innocent Spouse Relief
You should make an IRS injured spouse claim if the debt your return would otherwise offset is <em>only</em> in your spouse’s name, often from before you were married. Innocent spouse relief applies to tax debt that is owed jointly but one spouse had no knowledge of the misdeeds that created the joint tax debt. You should not submit Form 8379 for Injured Spouse Allocation if you plan to resolve tax debt via innocent spouse relief. If you’re unsure which relief is right for your family’s situation, contact a tax professional today.