The Internal Revenue Service provides protection to taxpayers who are married and whose partner has certain government obligations. Income tax refunds of individuals who owe back taxes, child support or spousal support or who have a federal nontax debt might be intercepted. An income tax intercept offsets the refund to pay off the government debt. If you're not legally obligated to pay your spouse's debt and earned income during the tax year, you might qualify as an injured spouse. If the IRS determines that you qualify as an injured spouse, you receive your portion of your joint income-tax refund. To qualify as an injured spouse, you must meet certain criteria and file an Injured Spouse Allocation.
To qualify as an injured spouse, you must file a joint income-tax return with your spouse for the tax year. If you file a tax return separately, the IRS can't use your refund to pay for your spouse's government debt and doesn't consider you an injured spouse. Although filing separate returns might be convenient for individuals without dependents, filing separately might also prevent you from claiming the Earned Income Tax Credit or the Child Tax Credit.
Certain community-property states have separate laws on whether the IRS can consider you an injured spouse. For example, Wisconsin requires that each spouse have a 50 percent interest in marital property, including debts. Generally, this law requires that both spouses are responsible for paying the debt, regardless of which spouse incurred the debt; however, certain cases, such as debt incurred before the marriage, might eliminate the injured spouse from being liable to pay the debt. Community property states include Arizona, Wisconsin, California, Idaho, Louisiana, New Mexico, Nevada, Washington and Texas. If you reside in any of the community property states, refer to instructions on IRS Form 8379 to determine whether you qualify as an injured spouse.
To qualify as an injured spouse, you must have earned income during the tax year. Earned income can include wages, self-employment and salaries. If you didn't have earned income, you didn't contribute to the taxes paid to the IRS. If you and your spouse claim the Earned Income Tax Credit or the Child Tax Credit on your return, the amount used to determine your credit is based on your spouse's earned income; thus, the IRS can apply the entire refund to the government debt.
How to File
To file an Injured Spouse Allocation, you must first complete your joint income-tax return. Obtain Form 8379 from the IRS website and use your tax return, W-2s and 1099s to determine your portion of gross income, taxable income, taxes owed and tax credits. File Form 8379 with your tax return, by mail or electronically. The IRS advises that it might take 12 weeks to process your income tax return and Injured Spouse Allocation paperwork.
Angela M. Wheeland specializes in topics related to taxation, technology, gaming and criminal law. She has contributed to several websites and serves as the lead content editor for a construction-related website. Wheeland holds an Associate of Arts in accounting and criminal justice. She has owned and operated her own income tax-preparation business since 2006.