Federal Income Tax and Injured Spouse Relief

If you are about to enter into marriage with someone, there are a number of subjects you should discuss beforehand: finances, children, where you want to live, you faith… the list is virtually endless.  But what about your federal income tax?

One thing many couples may not realize they need to discuss or consider discussing before they get married is their tax history.  If one person is used to receive a refund every year and the other person is not—or for that matter, the other person actually owes unpaid back taxes—then the person used to receiving a refund may be in for a shock.  He or she may find that his/her refund for one or many years is eaten up paying for his/her spouse’s tax liability.  What can be done about this?

Thankfully, the Internal Revenue Service (IRS) has provided a program to address just this situation.  This IRS program is known as Injured Spouse Relief.  In summary, the Injured Spouse Relief program allows one spouse to keep some of his income tax refund when his spouse owes an unpaid tax liability.

But not everyone will qualify for the Injured Spouse Relief program, and those who do qualify may find certain limitations and special exceptions depending on where they live.  You should in general keep the following points in mind related to the Injured Spouse Relief program:

To qualify as an injured spouse, you must meet the following qualifications:

  1. You must have reportable income during the tax year.
  2. You must have made tax payments from your wages, such as withholding by your employer or the payment of estimated quarterly tax payments if you are self employed, for your federal income tax.
  3. You must not be liable for the unpaid tax liability, which usually means they must stem from your spouse before you were married.

If you qualify as an injured spouse, you can submit IRS Form 8379 – Injured Spouse Allocation to request the Injured Spouse Relief amount for which you qualify.  Even if you qualify for the IRS Injured Spouse Relief program, you are responsible for submitting the appropriate form with your federal income tax return to request the relief.  Otherwise, the IRS will likely default to applying all of your refund to your spouse’s unpaid tax liability.

When you live in a community property state, community property laws may impact the relief you may receive under this program.  Additional information is available in IRS Publication 555 – Community Property.

Remember that the Injured Spouse Relief program is generally useful only if you are planning to file a Married Filing Jointly return.  If you and your spouse file separate federal income tax returns, you will receive your entire tax refund, but you will lose some tax benefits given to those who file as Married Filing Jointly.

If you have a spouse with an unpaid tax liability and you need help understanding if the Injured Spouse Relief program can help you, or to determine how to complete and submit the appropriate form, you should contact a trained tax attorney.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.