Innocent Spouse and Injured Spouse are not the same thing. The injured spouse occurs when the IRS seizes a deposit and uses it to pay a spouse’s obligation or debt. You may have IRS debt, state income taxes, state unemployment compensation, past-due child support or spousal support, or a student loan. In the event that the IRS deducted your refund to settle a debt owed by your spouse, you may be considered a spouse who was injured. The injured spouse can request that the IRS return the allocable portion of the refund due to the injured spouse. In most cases, the IRS will take quite awhile to make a refund. If the liable spouse receives a refund, the IRS retains the portion that is allocable to that spouse and applies the amount to the outstanding obligation.
Think about the situation in which you just learned that your spouse has been late with her student loan payment for six months. Maybe you discover that your husband is $5,000 in arrears on child support payments. Perhaps your wife believes she owes Uncle Sam $2,000 from a few years ago.
Under the Treasury Offset Program, the United States Treasury Department may take a portion or all of your joint refund to offset your spouse’s outstanding debts. Treasury Offset Programs can collect debt of the following types:
When the injured spouse needs relief, the program can help. Instead of having the entire refund amount applied to the qualifying debt, you are eligible to receive part of the refund.
Using Form 8379, Injured Spouse Allocation, you can request injured spouse relief.
To qualify for injured spouse relief, you must:
Let’s say you filed your joint tax return and later discovered your spouse hid $15,000 in side income. Perhaps you and your spouse applied for a tax credit and thought you qualified, but later discovered it was fraudulent. Or maybe you thought it was a credit and it was actually a deduction, and had no idea it wasn’t right.
For a spouse who was unaware of erroneous information on a joint tax return, innocent spouse allocation may be available. There is a difference between this and the injured spouse allocation, in which a refund is threatened by past-due taxes or debts.
In the Instructions for Form 8379, the first page explains the differences between the two forms. The IRS says innocent spouse relief applies if you meet these conditions:
You did not know or have reason to know about your spouse understating the tax rate or omitting income or claiming false deductions or credits.
There is an understatement of tax due to divorce, separation, or leaving your spouse.
The IRS deems that holding you responsible for this tax is unfair due to the facts surrounding your tax situation.
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