You said “I do” and promised to stay with your spouse for better or worse. Now it turns out that part of the "worse" is money your spouse owes the IRS for back taxes. You’re not the first person to ask the question, “If my spouse owes back taxes, am I liable?” The IRS recognizes this issue and provides a way to pay your taxes without being penalized for marrying someone who has IRS debt.
TL;DR (Too Long; Didn't Read)
Any spouse who loses part of her refund because of her spouse’s tax debt has the right to get back her share of the joint refund by filing as an "injured spouse."
How the IRS Collects Back Taxes
When people can’t meet their tax obligation, the IRS provides several methods for taxpayers to pay their tax debt. The taxpayer will receive a bill from the IRS for the amount owed, and the collection process begins. The unpaid balance is subject to compounding interest and late penalties until it is paid in full, so responding to the IRS as soon as possible is the best approach.
The IRS allows delinquent taxpayers to set up a payment plan and pay their debt in monthly installments. If the taxpayer needs more time to pay due to financial hardship or is a member of the armed forces, the IRS may decide to delay collection. Otherwise, the IRS can seize a taxpayer’s assets, including bank accounts and wages as well as pension income and Social Security benefits. Money will also be deducted from any future tax refund to pay the balance owed.
What if I Marry Someone Who Owes the IRS Money?
Many married couples choose to file a joint tax return in order to take advantage of IRS tax breaks extended to couples who file together. This may not be the best idea if one of the spouses has an outstanding debt that will cause the couple’s refund to be withheld. If this does happen, the spouse who didn’t owe the IRS money, also known as the injured spouse, has the option of filing Form 8379, Injured Spouse Allocation, to have his portion of the refund returned.
Should You Change Your Filing Status?
You may want to consider doing your taxes as married filing separately if your spouse owes back taxes. Taking this route will save you from the trouble of filing Form 8379 as an injured spouse. Although this form does give you the chance to get back your share of the joint refund from the IRS, you can avoid having your money collected in the first place by filing separately from your spouse. There are a few other situations where you may qualify to file Form 8379 as an injured spouse, including cases where you and your spouse’s tax refund may be applied to overdue state taxes and debts related to state unemployment compensation, child support and student loans.
How to File as an Injured Spouse
If you fit the qualifications of an injured spouse, you can file Form 8379 when you file your taxes. You can also amend your return or file the form separately after you file your taxes. Processing the form and returning your refund can take the IRS anywhere from eight to 11 weeks depending on how you file.
Injured Spouse vs. Innocent Spouse
If your spouse owes money to the IRS due to underpayment of taxes while you were married, you may qualify for innocent spouse relief if you had no knowledge of what your spouse was doing. This is different from being an injured spouse, where your spouse incurred an IRS debt prior to your marriage. For more information about innocent spouse relief, see Publication 971 from the IRS.
Catie Watson spent three decades in the corporate world before becoming a freelance writer. She has an English degree from UC Berkeley and specializes in topics related to personal finance, careers and business.