About “Injured Spouse” Allocation

Have you, or someone you know, been denied an income tax refund because it was funneled away by the IRS to pay toward an existing debt of one or the other persons filing a joint tax return? A little-known fact you may have missed is that if ONE spouse in the filing owns the debt [but the other person does NOT], only the portion of the refund belonging to the debtor spouse should be applied to the debt. A portion of the tax refund would be payable by the IRS.

Whether it’s for a student-loan outstanding, or other government liability [such as back income taxes unpaid], if the debtor spouse later married an “innocent” spouse (ie., a person who was not involved with incurring the original debt), then any joint income tax refund should be apportioned between the two earners’ incomes. The joint (married) taxpayers would then receive an equitable refund amount, as determined by their incomes for the year and the amount of the debt.

IRS description:
The injured spouse on a jointly-filed tax return files a form to get back their share of the joint refund when the joint overpayment is applied to a past-due obligation of the other spouse.

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Author: Accu-Tax Services

I am a baby-boomer, semi-retired, who began public accounting and tax prep services in late 1985. In assisting clients, I strive to take the stress out of necessary paperwork and tax reporting, whether clients are individuals or businesses.

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