There are certain conditions that make it possible for the IRS to seize any refund that may be owed to a couple. These may be brought on by defaulted student loans, back child support or spousal support, or simply an underpayment in a previous year. But what happens when only one spouse is responsible for the condition leading to the seizure of a refund? The other spouse becomes what is known as an injured spouse.
It is important to note that there is a difference in definition between injured spouse and innocent spouse. Both are entitled to relief under the rules of the IRS, but must use different forms and meet different requirements to qualify.
Filing a Claim
When someone makes a claim as an injured spouse because their partner on a joint return has debts that the tax refund is being seized to pay, they must file form 8379 with the IRS. The IRS will then determine what percentage of the refund would be designated for each spouse, and send the amount due to the injured spouse, keeping the rest against the other spouse’s debt.
The Innocent Spouse
If one spouse makes false or deceptive claims on a tax return to obtain a higher refund without the knowledge of the other, the other is known as an innocent spouse. Any time the IRS catches someone reporting false or misleading information that results in a larger refund than is due, they keep the refund and assess some hefty penalties against the individual or couple. If an innocent spouse is able to prove that he/she did not know about the deception, and did not significantly benefit from it, it is possible to obtain relief and get a portion of the tax return that would be due to that spouse sent to him/her.
Basically, this means that an injured spouse is the party harmed when the IRS seizes a tax refund on a joint return to pay the debts owed exclusively by the other spouse. An innocent spouse is the party harmed when a partner lies on a tax return in order to obtain a larger than due refund. This is true only if the innocent spouse is unaware of the deception and does receive a substantial gain from the deception.
These are two special cases that require special handling in order to be sure that the one spouse receives his/her fair share of any refund due, even if the IRS is withholding the other spouse’s portion to pay debts or penalties.