Injured Spouse Relief

Injured Spouse Relief is a provision that helps taxpayers who have their federal tax refund garnished to pay a debt owed solely by their spouse. This debt can include federal agency debts, past-due child support, state income tax debt, and state unemployment compensation debt. When a married couple files jointly, and one spouse is responsible for the debt, the IRS may apply part of the refund to settle that debt, leaving the non-liable spouse with a reduced refund. Injured Spouse Relief allows the non-liable spouse to reclaim their refund portion.

Understanding the Offset and Its Notification

When the Treasury Department garnishes a tax refund, it sends the taxpayer a “Notice of Offset.” This notice provides the details about the debt the refund was applied toward, including the agency receiving the payment, the amount allocated to the spouse’s debt, and the original refund amount. If the injured spouse does not receive the notice, they can contact the Treasury Offset Program (TOP) to determine where the refund went and dispute the garnishment if the debt has already been resolved.

Eligibility for Injured Spouse Relief

To qualify for Injured Spouse Relief, the taxpayer must meet specific criteria:

1. Married Filing Jointly: The taxpayer must have filed their tax return using the “married filing jointly” status.
2. Non-Liability for the Debt: The injured spouse must not be responsible for the debt that led to the garnishment. In cases where both spouses are liable for the debt (e.g., joint tax debt), neither spouse can claim this relief. For example, if a couple owes state taxes together, neither can seek relief.
3. Determining the Refund Allocation: If the injured spouse is eligible, the next step is determining how much of the refund belongs to them. This involves using IRS Form 8379, Injured Spouse Allocation, which helps calculate each spouse’s share based on their income, credits, deductions, and payroll withholdings.

Special Considerations for Community Property States

The allocation of income and refunds can differ in community property states, including Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. These states have laws that treat property and income acquired during the marriage as jointly owned, which impacts the injured spouse’s share of the refund.

How to Request Injured Spouse Relief

To request Injured Spouse Relief, the non-liable spouse must file Form 8379, Injured Spouse Allocation. This form calculates the portion of the refund that belongs to the injured spouse. It should be filed with the original joint tax return to speed up processing. If the form is not filed with the original return, it must be mailed separately after the return is filed, and it will take longer to process (up to 14 weeks if filed separately).

If the form is filed with the original joint return, processing takes about 11 weeks, ensuring the injured spouse receives their share of the refund without delay. If the IRS has already processed the joint return, submitting the form separately will take around eight weeks. 

Common Mistakes to Avoid

Several common mistakes can delay the processing of Form 8379:

1. Failure to Include Required Documents: If the form is filed separately from the original return, it should not include the joint return but must include income documents and proof of withholding (e.g., W-2s, 1099s).
2. Incomplete Information: When filing with the original or amended return, label the form with “Injured Spouse” on the upper left corner of the first page.
3. Incorrect Allocation: Allocate income, credits, deductions, and expenses to the spouse who would have claimed them if filing separately.
4. Confirming Debt: Ensure the debt that led to the refund garnishment is subject to offset before submitting the form.

Conclusion

Injured Spouse Relief is an essential tool for taxpayers who find their federal refund garnished to pay a debt their spouse owes. By filing Form 8379, taxpayers can reclaim their portion of the refund based on their share of income, deductions, and credits. For best results, filing the form promptly and correctly is crucial, especially if filing with the original return. This relief allows couples to benefit from filing jointly while protecting the non-liable spouse’s portion of the refund, thus ensuring fairness and minimizing financial hardship.