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How Do I Know if I Qualify as an Innocent Spouse for the IRS? – Mindie

“Dear Jim,

About 3 or so years ago, my husband was hit by a car while riding his motorcycle. He was not wearing a helmet, and sustained a brain injury, leaving him with short term memory loss, and various issues with his ability to comprehend things. Prior to the accident, he had lost his job of nearly 16 years, and had been in and out of work, depending on what was available in our area. In between jobs he collected unemployment insurance compensation through the Utah Department of Workforce Services. After his accident, holding a job became more difficult for him, and he had been let go from a couple of positions due to his inabitlity to follow through with some aspects of employer requirements.

His doctor finally recommended he apply for disability in the latter part of 2010. At the time, he was collecting unemployment benefits and did contact one of their representatives stating this. He was told to continue with is claim and basically just let them know if/when he is approved for the disabitlity claim if he was still collecting unemployment. He was approved approximately 4 months after original filing a claim, and received a check from the SSA. He immediately called the unemployment office to let them know he was approved, and that he had received a check from the SSA for disability benefits backdated to the original claim date. He discontinued filing a weekly claim for unemployment, but received documentation from the state of Utah saying they were filing suit against him for fraudulent claims of unemployment. They not only were making him pay back the months he received monies for disability, but for every dime he had collected altogether, which totaled over $22 ,000.

He and I have been separated on and off throughout the years, and unfortunately happened to be separted during this time. He did not fully understand what happened, and did not appeal their decision within their alloted time frame. I was not aware of this happening until after the fact, and only knew of this unfortunate situation as he explained it to me. Until our taxes were intercepted by the Federal Offset Tax program, neither of us knew they were not only making him repay the 3 to 4 months he had collected when he filed the disability claim (believed to be between 3 to 4 thousand, but every single dollar he had ever collected from the unemployment insurance program.

I have a few questions about filing for the injured spouse relief. I too have a qualifying debt of $900 the FMS witheld for offset. Our refund was $5522.00 this tax season.

Do I qualify for injured spouse relief? I think I should, but would like to be sure because of my debt that was offset.

Should I write a brief letter to send with it outlining the situation, or will that too slow the process?

Can allocate my husband as a dependent with the others? I have 3 children I am claiming from a prior marriage (we have none together) totaling 5. I am certain of the 5, I can allocate 4 for sure (one for myself).

My husbands only form of income is disability benefits, which isn’t not taxable income as I underestand it.

My income is self employment, and is our only other source of income, which is what I believe the entire refund about was based off of, as well as all depenents claimed except him, leading me to ask whether it is necessary to send any documentation of the business income with form 8379?

I do not have any W-2′s, 1099′s or any other issued documents. I do however have a large stack of printed paperwork; mostly proof of money I’ve collected by the company who purchases the goods from my business. It is not pre-reported, and is not taxed in any way. Are there any other documents I may need to send with 8379? Should I check the box asking if I would like the refund sent to an address other than what is listed on our return since they have already been e-filed?

The address listed on our return is my physical address, but all of our mail must go to a PO box in order to be received. I would prefer direct deposit, but do not see this as an option. Can I include the direct deposit form with the injured spouse form? Is it possible to have direct deposit? In the instructions, it states if tax return was e-filed, then 8379 needs to be provided to local tax office. I am not sure of exact locaton I ne ed to send either. Can I submit 8379 electronically?

Any insight and/or assistance you can provide regarding filing this is greatly appreciated!

Thank you so much!

Mindie”

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The Answer

How Do I Know if I Qualify as an Innocent Spouse for the IRS?   Mindie

Hi Mindie:

A summary of your facts:

  • Your husband has a past non-tax liability of approximately $22,000 for repaid SSA benefits that is being collected by the IRS through the Federal Offset program
  • You also have a $900 non-tax debt that is being collected by the IRS through the Federal Offset program
  • You did not file a joint return for the years that created the non-tax debt
  • You will be filing a joint return for this year with a joint refund of $5522

A summary of your questions and answers:

  • Do you qualify for innocent spouse when you file this year’s return? Yes- your situation is why injured spouse was created. FMS offsets are handled by the Form 8379. However, if you do not have any taxes paid or do not qualify for one of the refundable credits, you would not have a refund. In that case, all of the refund may be attributable to your spouse.
  • Can you file electronically? Yes. Keep in mind that your refund should arrive in about 11-12 weeks after filing.
  • Do you need to send additional documents with the Injured Spouse Form? You should send in all W-2s and other information statements with the Form 8379. If the Form 8379 income allocation needs explanation, you may send in a worksheet explaining the allocation of income sources to each spouse.
  • Can your refund be direct deposited into your account? Yes. However, if you file Form 8379 (PDF), Injured Spouse Allocation, you cannot have your refund direct-deposited into more than one account. Your refund should only be deposited directly into accounts that are in your own name, your spouse’s name or both if it’s a joint account.
  • If filing electronically, where do you send the Form 8379 after the return is filed? You file the 8379 to the IRS Center that you would file a paper return. This depends on the state that you live in- see this link for your state.

To answer your dependents reporting questions, I would need to have more information.

I hope this helps- I would visit a local trusted tax professional to sort out many of your questions.

Thanks

Jim

How Do I Know if I Qualify as an Innocent Spouse for the IRS?   MindieJim Buttonow is one of the resident debt experts here at GetOutOfDebt.org that helps people for free. Jim is a licensed CPA who spent 19 years with the IRS coordinating large compliance teams of IRS agents and specialized personnel. In the last 5 years, Jim has invented consumer and practitioner software and treatises on how to address many different tax issues. He has also represented many people before the IRS examination, collection, filing, and appeals functions. He currently assists taxpayers on an active pro bono tax practice aimed at serving people in need. He can be reached at IRSMind.com.

If you have a tax question you’d like to ask just use the online form. I’m happy to help you totally for free.

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About Jim Buttonnow

Jim Buttonnow
Jim Buttonow, CPA/CITP, is cofounder of Beyond415. He has more than 26 years of experience in IRS practice and procedure. Reach Jim at [email protected].

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