Posted by Accurate Books And Tax

Filing a Claim and Calculating Allocation for Injured Spouse

Filing a Claim and Calculating Allocation for Injured Spouse

A spouse is said to be injured if, after filing jointly with the partner, the refunds were seized due to a debt collected by either Uncle Sam or BFS (Bureau of Fiscal Services).

Most times, the IRS or BFS, Bureau of Fiscal Service usually takes the taxpayer's tax refund that has a debt or delinquent tax. Should any spouse be in such a category, either of the two-party above can collect the repayments to service the unpaid debts. 

If you have any delinquent taxes, Uncle Sam collects that, and whatever is remaining could be directed to the Bureau of Fiscal Service. If according to their records, the taxpayer in question has any debt referred to the Treasury Offset Program (TOP), the remaining refunds will be seized. Here are various debt types that the TOP can collect: student loans, unpaid child support, delinquent local and state taxes, etc. Any refund left after can then be released to the taxpayer. 

A spouse is said to be injured if the debt is the other party's responsibility, which robbed them of their refunds. 


Form to Fill for Injured Spouse Claim 

Form 8379, known as the Injured Spouse Allocation form, can be filled by the injured spouse when the IRS seizes the joint refunds, or there is a possibility that Uncle Sam will seize it to cover the debt of one of them. With the form, the taxpayer can try to recover their part of the tax refunds. 

There is the provision to file Form 8379 alongside the tax refunds. 

An electronically filed return takes 11 weeks or 14 weeks for other filing channels for the process of the injured spouse. However, it might take around eight weeks for Form 8379 filed after the joint return was sent since there is no return processing time. 


Innocent Spouse and Injured Spouse: Any difference

Consider a couple, married that files a return together. If any of the spouses does not report the full income or exaggerated the deductions, Uncle Sam can penalize both parties even if they are separated to collect the funds. The party not aware of the deceit here can be considered an "innocent spouse."

The "innocent" spouse, in this case, can request an exemption from the fines, penalties, and interest by filing and submitting Form 8857 – which stands for Request for Innocent Spouse Relief.


Getting Relief for a Partner’s Unpaid Taxes: How to Make a Request as an Innocent Spouse 

There is a possibility to be relieved from the penalties of faulty claims on the tax return. For one to, however, qualify, one needs to meet some requirements:

  • The joint return was for a married couple, and one of them made a mistake which led to the under-reporting or willfully understating the tax amount owed. 

  • When the innocent spouse signed the tax, the innocent spouse was not aware since there was no reason to suspect anything fishy.

  • If Uncle Sam demands payment from the innocent spouse, it will not be fair considering the given circumstances. 

  • There is an application for relief within two years, which happened after Uncle Sam made steps to collect the tax amount owed.


Provided that these requirements are satisfied, an innocent spouse can file Form 8857 in a bid to petition Uncle Sam for relief. On discovering that the innocent spouse is aware of the other spouse's fraudulent action, the innocent spouse needs to file the form immediately. There is, however, a provision of two years to file the 8857 Form, which follows the first attempt by Uncle Sam to get the taxes owed. 

All the requirements specified above must be met to get relief from the other spouse's tax liability. The joint tax return must contain some "erroneous item," and the innocent party should ultimately be in the dark about the error alongside the tax liability. The innocent taxpayer must prove the error alongside the tax liability that follows and the entire situation should show that the innocent spouse is neither aware, nor liable. This should conclude that holding the innocent spouse accountable for the partner's error will not be fair. 


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