If your spouse owes back child support and you are expecting a tax refund, you may be in for an unpleasant surprise. There are certain debts, such as child support, student loans and back taxes, which cause the IRS to withhold refunds, or “offset” them, to use IRS terminology. The funds then go to pay the amount owed. Back child support is not your debt, but you could lose your part of the refund if you file jointly. Fortunately, there are ways you can get your part of the refund.
Notice of Offset
The IRS should have sent the spouse owing child support a Notice of Offset. While this notice is sent by the IRS, it is issued by the U.S. Treasury Department's Bureau of the Fiscal Service. The notice includes the original refund amount, how much was taken out and what agency has the funds.
If you know your spouse owes back child support, consider filing separately. There are drawbacks to this approach, as you will lose some benefits you would have if filing jointly. Filing separately may not prove an option for retaining your share of the refund if you live in a community property state. Do the math for the benefits you can claim if filing jointly versus what you may gain from filing separately, i.e., your tax refund, and see which type of filing makes sense for your situation.
Change Your W-4 Exemptions
If you receive a tax refund, it is often because you did not have a sufficient number of exemptions on your W-4 form, filed with your employer. In effect, you are making a tax-free loan to the government. Change the number of exemptions so that you will not receive a refund or may have to pay a nominal amount of tax. Even though you won’t see a tax refund, you also won’t have to worry that the IRS will take it because of your spouse’s unpaid debts. Also, your paychecks will have additional money due to the added exemptions.
Injured Spouse and Form 8379
If you are the injured spouse, you may have filed Form 8379 when you filed a joint return and the tax refund was supposed to go toward the other spouse’s past-due obligation, such as child support. If you file Form 8379 with the IRS, you may get back your share of the joint refund.
File Form 8379 as soon as you find out that your share of the tax refund was supposed to go to your spouse’s child support obligations. File the form for every year in which this condition applies. Filing is required within three years from the original return’s due date, or within two years of the date you paid the tax that was later refunded, whichever is later. If you file the form with either a joint return or amended return by mail, make sure to write “injured spouse” on the joint return’s first page on the top, left corner. Include both spouses’ Social Security numbers in the order they appear on the joint return, if you file Form 8379 by itself. Don’t forget to sign and date the form before mailing, and send it to the IRS service center to which the original return was sent.
Community Property States
If you live in a community property state, the IRS must divide the joint refund according to your state’s community property law. In Arizona, the IRS may keep all of the community property portion of the tax refund for debt satisfaction. In California, Idaho and Louisiana, the injured spouse is refunded the amount of the tax overpayment constituting their separate property. In New Mexico, Nevada, Texas and Washington, whatever amount of the refund left after satisfying the child support obligation goes to the injured spouse.
- IRS: Topic 203 -- Refund Offsets: For Unpaid Child Support, and Certain Federal, State and Unemployment Compensation Debts
- IRS: Instructions for Form 8379, Injured Spouse Allocation
- IRS: Internal Revenue Manual, Special Topics, Community Property, Injured Spouse
- U.S. Dept. of Health and Human Services: Federal Tax Refund Offset Program
- Fox Business: Don't Lose Your Tax Refund Because of Your Spouse’s Debt
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