Obtaining Injured Spouse Relief from Federal Income Tax Liability

For many couples, getting married is one of the most important events of their lives. There are venues to book, guests to invite and registries to submit. With so much to plan, happy couples typically discuss a range of topics as the big date draws near.

But there is one important topic that often is overlooked, or at least under-discussed, during the lead up to most wedding days—the amount of debt each person is bringing into the marriage. These debts can include consumer debt, student loans or tax debt, to name a few. The partner who brings these debts into the marriage retains sole liability for them in many cases. One major exception is tax debt.

This post will discuss how the Internal Revenue Services (IRS) views tax debts for newly married couples who begin filing their taxes jointly and what can be done to insulate the spouse who is not responsible for tax debt owed by their partner before marriage.

What is Injured Spouse Relief?  

To better understand what injured spouse relief is, it is helpful to use an example. Dave and Linda were married a little over a year ago and filed their first joint return this year.

Unbeknownst to Linda, Dave owes taxes for years before they were married. Linda usually receives refunds when she files her tax returns, and both spouses expect to receive a tax refund this year. Instead of receiving the anticipated refund, the first-time joint filers received no refund at all. They later learned that the IRS redirected the refund to offset some of Dave’s outstanding tax balances through the Treasury Offset Program.

How did this happen? Unknown to Linda and Dave, when they chose to file a joint return, they created joint and several liability for any shared tax debts. This includes the tax debt that Dave had before he married Linda. The IRS doesn’t automatically distinguish which spouse has debt even if the debt existed before the marriage. This means that the IRS can collect from either party when there are taxes owed.

This may seem unfair to Linda. Fortunately, and somewhat surprisingly for Linda, the IRS agrees. To assist couples like Dave and Linda, the IRS allows couples to correct this issue by seeking injured spouse relief.

According to the IRS Taxpayer Advocate Service, “you’re an injured spouse if your share of the refund on your joint tax return was (or is expected to be) applied against a separate past-due debt that belongs just to your spouse, with whom you filed the joint return. This can be a federal debt, state income tax debt, state unemployment compensation debt, or child or spousal support payments.”

By applying for injured spouse relief, you are telling the IRS that it needs to differentiate between you and your spouse as to an existing tax debt in order to shield your tax refund from an offset. Once the IRS approves the request for injured spouse relief, it will treat your joint tax return as a separately filed return specifically as it relates to pre-marriage debts.

How do you Request Injured Spouse Relief?

To request relief as an injured spouse, taxpayers must file a Form 8379 with the IRS for each applicable tax year. Relief must generally be requested within three years of when the original tax return was due. If the three-year deadline has lapsed, injured spouse relief may still be sought when there are extraneous circumstances, such as domestic abuse.

To complete the review and approval process, the IRS may request additional information. Additional documentation may include the filing of an individual tax return for both spouses. The IRS will then review the wages, expenses, self-employment income and any credits for each spouse to determine the amount of the refund that it should provide to the injured spouse. It typically takes eight weeks for the IRS to review a new claim and issue a final decision.

The timing of the refund offset will determine when the injured spouse should file for relief. The injured spouse can submit Form 8379 along with the tax return for the current year to indicate to the IRS that it should not apply the refund of the non-responsible spouse to the pre-marriage tax debt. They can also send in Form 8379 when they receive a notice from the IRS that it had applied a refund to the pre-marriage tax debt. 

Once the IRS receives the Form 8379, it will calculate the refund that can be claimed and issue it to the requesting spouse.

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