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Is your refund at risk if your spouse has tax debt?

On Behalf of | Feb 1, 2021 | Tax Debt

Most married couples in Georgia consider themselves a team. They plan on handling anything that life throws at them together. This is not always easy, and when a person finds out that his or her spouse has financial issues, particularly relating to back taxes, the situation can be difficult to navigate and could cause some contention.

If you recently found yourself in this predicament, you may wonder if you are responsible for your spouse’s tax debt. The answer to this could depend on when the debt occurred. If it happened before your marriage, you may not hold any liability. However, if your spouse did not pay taxes after your marriage, you could end up having to pay.

Are you filing jointly?

It is likely that you are filing your tax returns jointly since you are married. This is a common step for married couples because it can offer various tax breaks. You may already know that you should receive a tax refund after filing your taxes, but if your spouse revealed that he or she has back taxes owed to the IRS, it is possible that the IRS will take your refund to cover your spouse’s debt.

Understandably, you may not want that to happen. Fortunately, you may have the option of filing for injured spouse relief. This could help you to keep your tax refund even though your spouse has tax debt if the IRS approves your request. You could file Form 8379 if you hope to receive this relief.

When should you file this form?

Because most processes with the IRS take time, you may benefit from filing Form 8379 as soon as you realize that your tax refund would cover your spouse’s tax debt. You could file this form when you send in your joint tax return, or if you found out about the issue after filing your return, you could file the form by itself.

Any unexpected tax-related issue can feel like a major setback. Fortunately, you could protect your refund by understanding your options for seeking relief from your spouse’s tax debt. This situation may also open up the opportunity for you and your spouse to discuss any other financial issues that may be lurking and determine how you could best go about handling them. It may be wise to encourage your spouse to look into tax debt relief options if the situation warrants it.