"Gary Bode has just completed our tax returns for the first time and I am totally satisfied with his level of service. He has been very attentive, asked all the right questions, and not only fixed some problems from our previous accountant, but also set us up for future success through a thorough and professional analysis of our corporate structure in conjunction with several personal variables.Gary Bode, CPA: a partial tax refund is better than no refund! Check to see if you meet Injured Spouse criteria. For a free phone consult, call 399-2705.
Injured spouse CPAs use IRS Form 8379 to save part of a married couple’s IRS tax refund from being garnished, by the IRS, to pay one spouse’s debt. The IRS acts as a collection agent for things like unpaid student loans, back child support and back taxes. When there’s a tax refund they garnish (seize) it to help pay these debts. Here’s a typical scenario I ‘ve heard already in 2013.
A married couple, expecting a nice federal tax refund, finds an IRS notice in their mail box. It explains their lovely joint refund went to a student loan company to satisfy one of the spouse’s prior obligation. Going, going, gone.
This post presents an example of how an Injured Spouse CPA might use Form 8379 to snag a part of that tax refund.
“A partial tax refund is better than no tax refund.”
- Gary Bode, injured spouse CPA and Form 8379 tax accountant
Filing Separately?
Injured spouse, in IRS lingo, means financial injury, not physical abuse. In our example Hubby has overdue student loans incurred indepenantly from his Wife. The IRS will garnish their entire tax refund, including the Wife’s share. An obvious solution, filing separate tax returns, is problematic and usually not the best approach. Filing jointly is almost always better for married couples.
How an Injured Spouse CPA might salvage a Partial Refund – A Form 8379 Example
Sometimes, a partial tax refund is salvaged using Form 8379, from a joint federal tax return where the entire tax refund would otherwise be seized. Here’s our example.
- Hubby works for Injured Spouse CPA, LLC and receives a W2 with $5,000 federal income tax withheld in Box 2.
- Both spouses know he’s behind about $6,000 on his student loan payments.
- The Misses works for Form 8379 Resolution, Inc. and receives a W2 showing $2,500 in Box 2.
- So, $7,500 total was withheld from their paychecks for 2012.
- They file a joint IRS Form 1040 in 2012, using generic online tax preparation software, to generate a $4,500 tax refund. Happy, happy!
- But the IRS eventually sends them a kind notice, explaining the entire $4,500 tax refund went to help pay Hubby’s student loan.
- The entire $4,500 2012 tax refund is garnished.
Solution: keep part of the expected tax refund by filing tax Form 8379
The Misses talks to her boss at Form 8379 Resolution, Inc. The CPA explains they could have filed tax Form 8379 with their 2012 1040, as an Injured Spouse claim, since Hubby’s overdue student loan payments were a known issue. Again, “Injured Spouse” refers to financial injustice not spousal abuse. In this case, the Wife is the injured spouse since it was Hubby’s student loan that caused the problem. Form 8379 allows $1500 of the tax refund to be released:
Wifey’s share of the refund {[2500/(5000+2500)] * 4500}. They retroactively file an amended federal tax return on Form 1040-X, including Form 8379.
Injured Spouse, Form 8379 Limitations
The Injured Spouse regulations don’t protect a tax refund if the debt is a mutual obligation. It is only applicable to earlier debt incurred by one spouse, usually back taxes, back child support or student loans. Nor is the Injured Spouse defense the same as the Innocent Spouse, which I describe elsewhere.
We’re an injured spouse CPA firm that prepares Form 8379. Our virtual office allows us to offer excellent service to long distant clients. Read any of the hundreds of posts on this site to get a feel for our ability and proactive attitude. We try to anticipate tax issues like the injured spouse example above. For a free phone consult, call (910) 399-2705.
How much to you charge to fill out the 8379 form???
Hi Nancy, I’m sorry you’re even thinking about filing Form 8379. There’s big range in the price as each case is unique. It depends on the required documentation, records etc. What we do is offer a half hour consult for $100 by phone. That gives me enough information to estimate your potential tax refund and give you a solid quote. Some Form 8379 cases aren’t cost effective. Hope that helps Nancy.
i am totally confused on how to fill this form out. i was told to fill one out for state and federal. can you help? how much would i get back from this form
You sound paniced Michele. There’s no info here to answer your questions. But the Injured Spouse defense can save thousands of dollars. Hope that helps a little.
Hi,
First of all the IRS is a big joke. As of Jan 1st 2014, they can no longer answer specific questions on line. You have to refer to their website. So I have filed form 8379 the past 3 years, but now my husband’s wages are being garnished through work. I need to know if I have to still file form 8379. I still want my portion of the refund.
Hi Tami: Sounds like you still need to file IRS tax Form 8379 for injured spouse protection.
I filed injured spouse with our joint taxes. I do not work and i have student loan debit. After our taxes were excepted and direct deposit was set for april 9 it was held up for state taxes we both owed. In the mean time i received a letter from my student loan saying all the return is being applied. So will they pay our state debit and send a check to us? Does my injured spouse form still apply w my loan? I’m going crazy!!! Thanks for the help!!!
Injured Spouse relief could save your part of the refund if the IRS uses it to pay your Husband’s student loan. It wouldn’t save your refund from being used for your student loan. Hope that helped.
My husband and I filed joint. Our refund ended up being applied to student loans he had prior to our marriage. We filed in CA, so it’s a community property state and is confusing and tricky. I’m trying to fill out form 8379. On part III, do I have to fill out all 3 columns?
Hi, I don’t generally give tax form instructions, sorry. Form 8379 is complex. Nut I think it’s the right form for your problem as I understand it.
Hi,
Just need to know what part 1 of injured spouse box 6 actually means. Are they asking basically if we have paid federal taxes like what appears on box 2 of w2s? So confused.
No Lissette they’re asking if you make estimated tax payments. Which have the same purpose, but are different from W-2 with holding. Hope that helped.
Hello:
Do you actually assist with filling in the injured spouse form? The questions in Part III are very tricky. Also, your consult fee of $100 as stated above - is that fee taken out of the injured person’s refund?
We help fill out the injured form on occasion. I don’t recall ever stating a price in a comment.
I just recently married. My spouse owes back child support. Is there anyway to protect my refund? Will the refund be split evenly? My income is much more than his as well and I pay more taxes up front so I can get a bigger refund.
Yes you can protect your part of the refund Candace.