This article is about the somewhat strangely named Form 8379 – Injured Spouse Allocation. I say that it’s an odd name for a form because when you hear the word injury, the idea of physical injury pops into one’s head. However that is not the purpose surrounding this form.
What the IRS means by injury when it comes to Form 8379 is an economic injury due to a prior financial obligation for which a joint tax refund (the result of a jointly filed return) can be garnished. These debts include federal, state, or local tax debts, unpaid child support, student loans, and other governmental debts subject to tax refund garnishment. This is the source of your injury – the fact that you have been injured financially by your spouse’s inability to pay his or her prior debts.
It’s important to realize, however, that to be classified as an injured spouse, you cannot have any shared obligation in your spouse’s prior debts. Therefore, for example, if it’s a debt that you legally owe or you also owe with your spouse, then you’re not an injured spouse.
As to the specifics of Form 8379, Part 1 of the form asks you several questions, each one with the purpose of weeding out those who should not apply for an injured spouse allocation. Part 2 asks you to specify the names of the taxpayers in the order that they appear on the return, i.e. first and second, along with respective social security numbers. This section also asks you to check a box indicating which spouse is purportedly injured. Part 3 is the particularly substantive portion. It asks you to allocate (hence the name Injured Spouse Allocation) your portion of total income from your spouse’s regarding the tax return that generated the refund. This allocation section includes elements such as Form W-2 and other types of income, adjustments, deductions, exemptions, credits, other taxes, federal income tax withheld, and other tax payments. Finally, in Part 4, whoever the injured spouse is will have to sign the form under penalty of perjury, so don’t lie about this type of thing.
If you’re wondering why there isn’t a definitive dollar figure as to your injury when you complete Form 8329, it’s because IRS gets back to you after an independent determination of the dollar amount of your injury, if any.
Additionally, as with most tax topics, a few caveats are in order here. First, innocent spouse relief is different than an injured spouse allocation. Briefly touching on this, innocent spouse relief, Form 8857, pertains to an impropriety surrounding one spouse misleading the IRS as to income or deductions without the knowledge of the other spouse. So the difference here is that an injured spouse has more to do with a garnishable debt prior to marriage than it does one spouse’s unknown tax impropriety or deception.
Next, an injured spouse must apply for relief within three years of the due date of the original return or within two years of your refund being garnished to pay for your spouse’s unpaid debt, whichever occurs later. For example, if for tax year 2017, your joint tax refund was garnished in 2019 to pay your spouse’s child support that you had nothing to do with, you’d have until April 15, 2021 to apply as an injured spouse. Note that this three year period from the due date does not change if you file an extension for that year.
Finally, a word about Texas community property laws because Texas is the primary state in which Dino Tax Co operates. Texas community property laws classify all property that exists within a marital estate as either community property owned equally between the spouses or separate property, owned by only one spouse. Income earned during a marriage is presumed to be and almost always is community property, and the spouse that earns that income is considered to have control over it even though the other spouse has a right to one half. This type of community property is called sole management community property, and it’s important because in the state of Texas, the law states that the IRS can take up to 100% of the sole management community property income of the spouse that owes the garnishable debt, and up to 50% of the sole management community property income of the non-debtor spouse, in order to satisfy the debtor spouse’s obligation. Therefore, if you file for an injured spouse allocation, and you earn income and your spouse earns income, and the debt owed by your spouse eclipses the amount of the refund you and your spouse are owed based on your return, then be prepared for the IRS to come back with a determination that you’re only getting back half of what was taken out of the refund attributed to your income because: 1) your spouse paid with 100% of the refund attributed to his or her sole management community property income, and 2) you paid with 50% (your spouse’s half) of your sole management community property income. Complicated, I know.
Anyway, if you need help determining anything to do with an injured spouse allocation, or you have any other tax issue or problem, don’t hesitate to contact me by sending an email to firstname.lastname@example.org or call (713) 397-4678. The first phone consultation is always free. Also, if you like us, consider liking us on Facebook; that always helps.