Discussion:Wifes refund, Husbands tax debt
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Discussion Forum Index --> Tax Questions --> Wifes refund, Husbands tax debt
| 27 January 2007 | |
| A lady marries this guy who is making payments to the IRS on an installment agreement. In the first year of their marriage they file a joint return and the IRS grabs the refund.
The wife calls me today and wants to know if she files married filing separately instead of joint, will the IRS still take her refund. I answered that I didn't think so, but having spent the last hour trying to verify that, I can't find a definitive answer. They live in a community property state. Has anybody had this experience? Thanks [Don't ask me why they didn't just adjust their withholding after losing the first refund.] | |
| January 27, 2007 | |
| I don't live in a community property state, so I'm not sure if my answer will be 100% correct, but when I have this type of situation, I'll include a Form 8379, Injured Spouse Allocation. The injured spouse (the one who doesn't owe the money) will get his or her share of the refund on a joint return, and the non-injured spouse (the one who owes the money) will have his or her share of the refund allocated toward the debt. The instructions for this form does address the issue of community property states. | |
| 27 January 2007 | |
| An 8379 works in my community property state. Especially nice if the injured spouse has no income because non-injured spouse income is split 50-50. | |
| 29 January 2007 | |
| The Service issued a series of Revenue Rulings regarding the applicability of the injured spouse rules for each of the nine community property states. For example, under the rulings, an injured spouse claim filed with a joint return on Form 8379 would be ineffective in California since under California family law, both halves of commmunity property can be used to satisfy a separate property debt. Thus, a joint return with an 8379 attached would probably be ineffective if both taxpayers are domiciled in California.
In addition, the Service has the authority under California law to make a direct levy against the non-debtor spouse's wages. However, the Service generally does not disturb the refund on a separately filed return of the non-debtor spouse. | |
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