Understanding IRS Form 8379: The Injured Spouse Allocation
It’s exciting to get a tax refund, right? But what if that anticipated refund doesn’t arrive because the IRS is using it to pay off debts your spouse owes? It’s frustrating, to say the least! This is where IRS Form 8379 comes in. It’s designed to protect you – the “injured spouse” – from having your share of a refund used to settle your spouse’s past-due obligations. Let’s dive into what this form is all about and how it can help you.
Why Does This Even Happen?
When you file a joint tax return with your spouse, you’re essentially combining your financial lives for tax purposes. This is why you might receive a bigger refund overall when filing jointly. However, this also means the IRS treats the refund as belonging to both of you. If one spouse has certain past-due debts, the IRS can legally intercept the entire refund to cover it.
These debts can include things like:
- Federal income tax debts.
- State income tax debts.
- Past-due child support.
- Federal student loans in default.
- Other federal debts, such as overpayments from unemployment compensation.
The important thing to remember is this: just because the IRS is applying your refund to your spouse’s debt doesn’t mean you lose it all. If you are not responsible for that debt, you can file Form 8379 to get back your portion of the refund.
What Makes You an “Injured Spouse”?
The IRS considers you an “injured spouse,” not a “wronged spouse”. It’s important to note that this doesn’t mean your spouse did something wrong to you; it is simply the term used when the IRS offsets a joint refund. You are considered an injured spouse if all of the following are true:
- You file a joint return.
- You are entitled to a refund.
- Your refund was, or will be, applied to your spouse’s past-due federal obligations.
- You are not legally responsible for your spouse’s debt.
Keep in mind that if the debts are joint debts, such as debts related to a business jointly operated with your spouse, or if you are responsible for your spouse’s debt because of joint liability, you may not be eligible to receive your portion back.
How Does IRS Form 8379 Work?
Form 8379 is your tool to claim your share of the tax refund. You will need to complete the form and then attach it to the back of your joint tax return, or you can file it separately after you already filed. Once the IRS processes your return, it will determine the amount of the refund attributable to you. Your portion of the refund will be issued to you, while the remainder will be applied to your spouse’s debt.
The important thing to remember is that you should not file the form if you are simply upset because a portion of the joint refund was applied to a debt of your spouse if they are solely liable for the debt.
Let’s break down the essential steps:
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Obtain the Form: You can find Form 8379 on the IRS website. It’s a relatively short form and can be completed in just a few minutes, if you have the necessary information on hand.
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Complete Your Return First: Always finish your joint tax return (Form 1040) as you normally would. This establishes the basis for your refund amount.
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Fill Out Form 8379: You’ll need some basic information, including:
- Your social security number and your spouse’s social security number.
- Information about your income, deductions, and withholdings.
- Information regarding income tax withheld on forms W-2 or 1099.
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Attach or Submit Separately: If you are filing your return on paper, attach Form 8379 to the back of your return, or attach it to the front of your return if filing electronically. If you have already filed your return, you may submit the form separately.
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Be Patient: The IRS typically takes several weeks to process a return with Form 8379. Don’t be alarmed if it takes a little longer than usual to receive your refund.
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Watch your Mail: If the IRS cannot determine your allocation using Form 8379, they may ask for additional information. If they deny your form, they will send a notice explaining why.
Examples to Illustrate
Scenario 1: Student Loans
Let’s say you and your spouse file jointly and are expecting a $4,000 refund. However, your spouse has defaulted on federal student loans, with an outstanding balance of $6,000. The IRS might intercept the whole refund. But, you earned 70% of the income on the tax return. By filing Form 8379, you could potentially receive 70% of the $4,000 refund, or $2,800. The remaining $1,200 would go toward your spouse’s student loan debt.
Scenario 2: Child Support
You file jointly with your spouse. You are expecting a $1,500 tax refund. Your spouse owes $3,000 in back child support. If you are not the parent that owes back child support, and if you earned a portion of the refund, filing Form 8379 will help you get your portion back.
Who is Eligible for “Injured Spouse” Relief?
You’re eligible for injured spouse relief if:
- You filed a joint tax return with your spouse.
- You aren’t responsible for the debt your spouse has.
- You contributed income, and are due a refund.
- The IRS is applying your refund toward your spouse’s federal obligations.
Related Tax Terms and Concepts
Understanding a few related concepts might be helpful:
- Joint Tax Return: When married couples choose to file a single tax return.
- Tax Refund Offset: This is when the IRS uses your refund to pay for past-due federal debts.
- Community Property: In community property states, you may have to file additional information with Form 8379.
Tips and Strategies
- File Early: Submit Form 8379 as soon as you can, with your return, to avoid delays.
- Keep Detailed Records: Maintain all your financial records to prove your income and withholdings. The more supporting documentation you have, the better.
- Consult with a Tax Professional: If you are unsure how to fill out Form 8379 or have complex financial situations, consider getting professional help. It can be a good investment to ensure accuracy and to maximize your refund.
Common Mistakes and Misconceptions
- Thinking “Innocent Spouse” Relief Applies: The injured spouse relief is different from “innocent spouse” relief. Innocent spouse relief applies when you are unaware of tax errors or discrepancies made by your spouse, and you can be held responsible for those.
- Assuming You Will Get All of Your Refund: The IRS will only allocate the portion of the refund that is attributable to you.
- Not Filing: The biggest mistake is not filing Form 8379 when you’re eligible. You could be leaving money on the table that rightfully belongs to you.
Final Thoughts
IRS Form 8379 might seem complicated at first glance, but it’s simply a tool to help protect your refund when your spouse owes the IRS money. Don’t let your spouse’s debt unfairly reduce your tax refund. If you think you might qualify as an injured spouse, it’s well worth the effort to complete and submit this form. Remember, knowledge is power – and in this case, it can be a lot of money back in your pocket.