"We first selected Gary Bode because of his familiarity with a creative financing scheme for our new small business. During our time with Gary, his insights have helped us better structure our small businesses, save money, and learn to be better small business managers. When it comes to small business accounting, a little hand-holding goes a long way."—Justin and Joelle LeBlancGary Bode, CPA: the IRS does a great job on their documentation for Forms 8857 and 8379. But if you'd like a free initial phone consult, please call 399-2705.
Form 8857 and Form 8379 have similar names, neither of which is intuitively obvious. While the IRS does a great job with documentation, these forms, especially Form 8857, entail complex issues.
Form 8857; Request for Innocent Spouse Relief
Here one spouse, usually after separation or divorce, tries to avoid IRS tax liability from a previously filed Form 1040. Filing a joint return means both spouses are responsible for the taxes, penalties and interest due. Now you’re asking the IRS to make you “un” responsible for tax liability you previously signed off on. The new Form 8857 is four pages long and asks very personal questions. Like if the innocent spouse was abused. Generally, you have two years to file Form 8857, but recent tax court cases allowed a longer time period. We feel Form 8857 is a potential mine field that deserves a CPA consult.
Form 8379; Injured Spouse Allocation
Here, one spouse is asking to receive their fair share of a tax refund, on a current or past, Married Filing Jointly, Form 1040 tax return. Without filing Form 8379, an entire refund, including the injured spouse’s share, can be offset (snatched) by the IRS and passed along to satisfy the other spouse’s debts, i.e. past child support, defaulted student loan, etc. A partial refund is better than no refund. Please see our past post on Form 8379 and Injured Spouse.
So, Form 8857 and Form 8379, serve different purposes, despite having similar and misleading names.
I’m a CPA in Wilmington NC who understands the tax consequences of separation and divorce. Unfortunately, tax and legal obligations intrude during difficult life events. My goal is to reduce your taxes by every possible legal means, in an empathetic, non-stressful manner. If you’d like a free initial phone consult on Form 8857 or 8379, please call (910) 399-2705. We serve a broader base then just the greater Wilmington NC area.
