The Internal Revenue Service (IRS) has the power to seize income tax refunds when a taxpayer owes certain debts, such as unpaid taxes or overdue child support. Sometimes, a married couple’s joint tax refund will be seized because of a debt for which only one spouse is responsible. When that happens, the other spouse is said to be “injured” and can file Form 8379 to get at least some of the refund.
When tax refunds might be seized
In general, federal tax refunds can be intercepted only to pay debts to the government or to satisfy court-ordered support obligations for:
Past-due federal taxes
Past-due state taxes
Debts owed to state unemployment compensation agencies, such as for overpaid benefits that a recipient had been ordered to return
Unpaid child support
Unpaid spousal support (alimony)
Any other delinquent federal debt, such as a student loan
The IRS can intercept the entire refund from a married couple’s joint tax return even if only one of the spouses was legally liable for the debt. This can happen, for example, when one spouse owes child support. The responsibility for that debt is his alone, but his spouse will suffer—be “injured,” in other words—when the IRS seizes the refund.
The same thing can happen if one spouse has defaulted on a federal student loan for which only she is responsible for repayment, and the couple’s refund is seized as a result. Form 8379 essentially asks the IRS to release the injured spouse’s portion of the refund.
Filling out the form
A couple can file Form 8379 along with their joint tax return if they expect their refund to be seized. Alternatively, the injured spouse can file it separately from the return if they find out after they file that a refund was seized. The form has four parts:
Part I is a series of yes-or-no questions to determine whether someone really is an injured spouse and, if so, how to proceed
Part II provides information about the joint return that produced the refund in question
Part III is for determining exactly how much of the refund is attributable to the injured spouse and should be released by the IRS
Part IV is for use only if the form is being filed separately from a tax return; the injured spouse signs and dates this section
Injured vs. innocent spouses
Form 8379 is not for use by so-called innocent spouses. The terms “injured spouse” and “innocent spouse” are so frequently confused that the first page of the Form 8379 instructions specifically address the matter.
Innocent spouses are people who find themselves facing back taxes, civil penalties, and even criminal prosecution because of a fraudulent tax return filed by a spouse without their knowledge. Innocent spouses can seek relief from the IRS by filing Form 8857.
Why Taxes? Why Now?
"We opened up shop here in the Wylie, Sachse, Murphy area in 2018 with a passion to help start-ups and small businesses get on top of their bookkeeping,” Allen explains.
“What we found was a lot of folks just don’t get the tax game. And now that there are new laws and regulations, many are starting to panic; but trust me, small businesses have everything to gain with the new Section 179 Deductions.
“After filing a few late returns, in that first year, we learned that there is a real need for some tax expertise. We spent a good part of 2018 getting up to speed on tax law, and now I am an Enrolled Agent, federally licensed to practice before the IRS on behalf of my clients and anyone else who may be facing the daunting ‘IRS boogie man.’
“During tax season, we are prepared to handle it all.
For individuals we have helped folks with past-due tax returns and work with the IRS to eliminate all penalties... sometimes we given get rid of the tax debt itself.
For companies the biggest problem businesses of all sizes have is filing and paying their payroll taxes - both state and federal - on time. The rules for 940s and 941s are extremely confusing so we have helped a lot of companies catch up.
If they like our work, they sometimes retain us for bookkeeping and payroll.
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