Senate Cents: A Financial Wellness Blog

What are injured spouse claims?

If you file a joint tax return with your spouse and your spouse is liable for certain debts, including student loans, taxes, and child support arrearages, the IRS is authorized to use any refund that might be due for the joint return to offset those debts. Thus, your own income tax refund may be jeopardized if your spouse contracted a debt prior to your marriage. By filing an injured spouse claim with the IRS, it may be possible for you to obtain your portion of the tax refund without that portion being reduced by your spouse's debts.

Why can your refund be taken if your spouse owes money?

Generally, debts you contract prior to your marriage are construed as separate debt, and debts that you and your spouse contract together during the course of your marriage are considered marital debt. As a general rule, you're not responsible for paying (either during the marriage or after any divorce) the separate debts that your spouse contracted in his or her name alone prior to your marriage.

However, if you file a joint tax return with your spouse and your spouse is liable for certain debts, the IRS may intercept any refund that might be due for the joint return. Before the IRS issues a refund on a joint return (or on any return), it must determine whether either party signing the return owes any federal taxes from prior years. A refund would be applied first to any unpaid federal taxes; any remaining amount would then be applied to any delinquent child support, state taxes, and other federal debts.

The IRS may then forward all or a portion of such refund to the appropriate federal or state agency that reported your past due debt. You will receive a notice from the IRS if your refund is applied against a past due debt. The notice will give you the amount of your total refund, the amount that has been applied to your past due debt, and the name, address, and telephone number of the agency that received the money. All matters concerning a debtor's liability for the debt (such as the amount of debt outstanding) must be referred to the agency where the obligation is owed. Only that agency has the authority to make any determination concerning a debtor's obligation.

How do the rules for injured spouse claims work?

Because it would be inequitable for you to lose your portion of the tax refund simply because your spouse owes money, the IRS allows you to file an "Injured Spouse Claim and Allocation" form (IRS Form 8379) to claim your share of the tax refund, without that share being reduced by your spouse's debts .

To be considered an injured spouse, you must not be otherwise required to pay your spouse's past due amount and you must have:

• Filed a joint tax return
• Reported income of your own (such as wages, interest, etc.) on the joint return, and
• Made and reported payments (such as federal income tax withheld from wages or estimated payments), or claimed the earned income credit or any other refundable credits on the joint return
• Had an overpayment

Example(s): Hal and his wife, Jane, filed a joint tax return and expected a $2,000 refund ($1,000 of which was attributable to Hal and $1,000 to Jane). Subsequently, they received an IRS letter informing them that the entire $2,000 was to be offset against Hal's defaulted student loan obligation. Jane then filed an injured spouse claim with the IRS and eventually received her $1,000 tax refund. IRS Form 8379 must be signed by the injured spouse and sent to the IRS service center where the original tax return was filed. If

you haven't yet sent in your tax return, you should attach IRS Form 8379 to the back of your IRS Form 1040 (or Form 1040A or Form 1040EZ). Write "Injured Spouse" at the top left of your tax return.

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