Injured Spouse Rules May Benefit You

Oops! You filed a joint return, and the federal income tax refund you were expecting shrank before it hit your bank account. The letter that arrived in the mail tells the story: Your spouse had outstanding debt from before you were married — debt you are not responsible for. Your joint refund was reduced, or offset, to repay the amount owed.

Is there anything you can do?

You may be able to recover your share of the refund if part of the income on the return is attributable to you and you made tax payments via withholding or estimated vouchers. Recovery is also a possibility if you claimed a refundable tax credit on the joint return.

Here’s how the process works.

When the repaid debt belongs solely to your spouse and part of the overpayment you were expecting belongs to you, the “injured spouse” rules come into play. Under these rules, you allocate amounts shown on your joint return between the two of you as if you had filed separate returns, and report the results on Form 8379, Injured Spouse Allocation.

You can file Form 8379 separately from your income tax return, or, if you’re aware of debt that will be offset by an expected refund, include Form 8379 with your return. Keep in mind you’ll need to apply for relief each year that an offset might occur, and that special rules apply to community property states.

Let us know whenever you get correspondence from the IRS. We’re here to help.