I’m Married and Filed Jointly, Then the IRS Kept My Refund. What Happened?
Sometimes you don’t realize it is going to happen. You are expecting your tax refund and it never arrives. You may ask your tax professional or call the IRS at 1-800-829-1040.
Here’s what may have happened: they kept the refund because your spouse owes money. This is often back taxes, both federal and state. But it can also be student loan debt, child support, or other government debt.
What Can I Do?
In some cases, you can set up a payment plan so that you can receive future tax refunds. In some cases, couples decide to file Married Filing Separate for future tax filings. But if you pay to file your taxes, this can increase costs to file. More importantly, this can cause you to lose out on credits or deductions that aren’t allowed when filing Married Filing Separate.
Also, this solution doesn’t help you now.
What is the Injured Spouse Allocation?
Fortunately, there is another path. And you can do this with your tax return or afterwards if you don’t realize the issue until after the return is filed. The IRS has a tax form for this situation. It is Form 8379 Injured Spouse Allocation. You can file this form with your tax return, with an amendment, or separately after your tax return is filed. “Injured spouse” in this case doesn’t mean physical or mental injuries. It means that one person’s debt is affecting the “injured” spouse’s share of the tax refund. Form 8379 is used to allocate a portion of the refund to the spouse. It is possible that the IRS will determine a different number than you or your tax professional determines by using the form.
Downsides of Injured Spouse Allocation
The disadvantage of the injured spouse form is that it adds to the processing time. When filed with your joint tax return it can mean it will take 11 to 14 weeks to process your tax return. A Form 8379 filed after a joint tax return is processed can take about 8 weeks to process. Realize that it also slows down the pay-off of the debt. Form 8379 has to be filed each year when filing a joint return if one spouse has debt that is subject to collections from the refund.
Is Injured Spouse Allocation Right for You?
The Injured Spouse option can be very helpful because it often allows you to make sure a large portion of the refund is still received. And preserving some of the refund for you to use can make the longer processing time worth it.
One final point: if you have debt that your refund may be directed towards involuntarily, you may want to let your spouse know before it happens. I’ve found that this is one surprise that spouses don’t like!
Jerry Zeigler is a Navy veteran who serves service members with financial counseling and education. As an Accredited Financial Counselor®, he is a member of the Better Financial Counseling Network and is the owner of JZ Financial Management. As a tax professional and Enrolled Agent, he has a passion for helping taxpayers navigate taxes.