Lability and Relief Flashcards
Ashleigh and Dino expect a $7,000 refund on their jointly-filed return. However, Dino has $45,000 in past-due taxes that he accrued before he and Ashleigh were married. Which form should they file in order to prevent Ashleigh’s share of the refund from being collected?
Form 8888
Form 4567
Form 8379
Form 9762
A taxpayer is an “injured spouse” if he filed a joint return and all or part of his share of the refund was, or will be, applied against the separate past-due federal tax, state tax, child support, or federal non-tax debt of his spouse with whom he filed the joint return. An injured spouse may be entitled to recoup their share of the refund. The injured spouse files Form 8379 with a jointly-filed tax return when the joint overpayment was—or is expected to be—applied to past-due obligation of the other spouse. By filing Form 8379, the injured spouse may be able to get back his or her share of the joint refund. The taxpayer may file Form 8379 with a joint return, with an amended return, or by itself at a later time.
Explain the difference between an injured spouse and innocent spouse
Both “injured spouse” and “innocent spouse” refer to situations where a married couple filed a joint tax return, but one spouse is unfairly burdened by the tax consequences of the other spouse’s actions. However, there are key differences in the scenarios they apply to:
Injured Spouse:
Situation: This applies when a joint tax refund is withheld to pay off the other spouse’s past-due debts, such as student loans, taxes, or child support.
Focus: The injured spouse did nothing wrong, but their share of the refund is taken away because they filed jointly.
Relief: By filing Form 8379, the injured spouse can request their fair share of the refund to be allocated back to them.
Innocent Spouse:
Situation: This applies when the other spouse underreported income or made other errors on the joint tax return, resulting in additional tax liability. The innocent spouse was unaware of these errors.
Focus: The innocent spouse is not responsible for the other spouse’s mistakes.
Relief: By filing Form 8857, the innocent spouse can request relief from some or all of the additional tax burden, depending on the specific circumstances. There are stricter requirements to qualify for innocent spouse relief compared to injured spouse relief.
Jim and Tammy, husband and wife, were both employed and filed a joint return which showed they were entitled to a refund of $1,000. Rather than receiving the refund of $1,000, they received a notice advising them that the entire refund was applied to an amount due that Jim owed from a prior year, which was before they were married. Can Tammy do anything to collect her portion of the refund?
No, it’s too late because the IRS took the entire refund.
No, because she should have filed MFS and taxpayers cannot amend their return to change their filing status from MFJ to MFS.
Yes, she could be considered an innocent spouse and should file Form 8857.
Yes, she could be considered an injured spouse and should file Form 8379.
A person is an injured spouse if his share of the overpayment shown on his joint return was, or is expected to be, applied (offset) against his spouse’s legally enforceable past-due federal taxes, state income taxes, child or spousal support payments, or a federal nontax debt, such as a student loan. If a spouse is an injured spouse, he may be entitled to receive a refund of his share of the overpayment by filing Form 8379, Injured Spouse Allocation.
difference between an injured spouse and innocent spouse
Key Points:
Injured spouse relief focuses on protecting the refund.
Innocent spouse relief addresses additional taxes owed due to errors.
Both provide relief when one spouse is unfairly affected by the other’s actions on a joint tax return.
Mnemonic:
Injured Spouse Relief and
Innocent Spouse Relief
Injured Spouse Relief:
Think of it as a shield to protect your share of the tax refund.
Scenario: Imagine you and your spouse filed a joint tax return, and your spouse owes back taxes (like child support). Your refund is being used to pay off those debts. You feel “injured” because your share of the refund is affected.
Mnemonic: “Shield for Refund” or “Protecting My Share”.
Innocent Spouse Relief:
Picture an angel standing up for you.
Scenario: Suppose your spouse made errors on the joint tax return (like underreporting income), and now you’re facing additional taxes. You didn’t know about those errors, and it’s not fair for you to be held responsible.
Mnemonic: “Angel Protects Me” or “Not My Fault”.
