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Wilmington NC CPA Firm discusses IRS Tax Form 8379 | Injured Spouse Allocation

Wilmington NC CPA Firm discusses IRS Tax Form 8379 | Injured Spouse Allocation

Gary Bode, CPA: like most IRS issues, Form 8379 has quirks. If you'd like a free initial phone consult, please call us at 399-2705.

IRS Form 8379, Injured Spouse Allocation, can protect part of a married (or divorced) couple’s IRS tax refund from offset.  Offset, in the following example, means the IRS snatches the couple’s entire tax refund and sends it to some other agency (i.e. a student loan lender, when the loan is in default).  But part of that snatched refund could be saved from offset IF

  • Only one spouse actually owes the debt.
  • The injured spouse (the one not in default) “earned” part of the tax refund.
  • The injured spouse files IRS tax Form 8379.

An Example Where Part of a Married Couple’s Tax Refund is Saved using Form 8379

While this Form 8379 example is straight forward, you will want to consult with your own CPA to see how your particular circumstances factor in.

Scenario

Hubby is in default of his student loan for $25,000.  The wife works for a Wilmington NC CPA, and in 2012, receives a Form W-2 showing $4,000 of federal with holding in Box 2.  Hubby works for Wilmington NC Widgets and receives a Form W-2 showing $6,000 in Box 2.  So, they had a total of $10,000 of federal taxes with held in 2011.  Their Form 1040 tax preparation is simple and Turbo Tax has them expecting a $5,000 IRS refund.  But predictably, the IRS sends them a Notice explaining the entire $5,000 refund went to Hubby’s student loan lender.  Ouch!

“A partial IRS refund is better than no refund.”
-Gary Bode, CPA in Wilmington NC

Form 8379 Saves the Day, or part of it anyway

The wife can file Form 8379 and retroactively salvage her fair share of the couple’s tax refund.  Note she could have filed Form 8379 with the original Form 1040 or separately.  Her share of the refund is $2,000 [(4,000/10,000) x $5,000].

We’re a Wilmington NC CPA firm that understands how to use IRS Form 8379, Injured Spouse Allocation. If you’d like a free initial phone consult, call us at (910) 399-2705.  Don’t let distance deter you.  We serve a broad geographical base beyond NC.  Please read some other posts to gauge our expertise and proactive philosophy.

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