Before we maried last year, my wife owed money to the IRS. What's the best way to file this year?

Question

Spouse owes $3000.00 plus to IRS. I on the other hand usually get 4 to 5 thousand back because I over-pay. I don't IRS taking my return to satisfy my wife's IRS debt? How or What should I file?
Thank You

Answer 1

Mahal makes an astute observation. It is much better to pay off a high-interest debt (and the IRS charges as much as some credit card companies) than it is to have the benefit of your portion of the refund. In fact, based on the figures you supplied, it is actually a no-brainer. The marginal effect you would likely have will be eaten up several times over in interest for later years.

As to how you should file, always file using the status that gives the smaller tax bill. In almost all cases, that is Married, Filing Jointly. You should, of course, compute your position as Married, Filing Separately just in case. If you are doing your return yourself, online programs can handle this in as much time as it takes to click a mouse, provided you allocate income and deductions correctly between yourself and your wife.

Answer 2

You'll almost surely pay less in total taxes if you file a joint return rather than married filing separately. You can file an injured spouse form to split out the refund and you'll still get the portion that's attributed to your income and withholding. To minimize delays, send in the injured spouse form WITH your return.

Answer 3

This is a personal decision. If it were me, marriage is a mixing of all assets and all debts, and my wife and I would pool our resources and pay it off together. We would file married joint and try to get the largest refund that we could to trim down that debt.

Remember that as long as that debt is out there, you're paying interest, and the IRS is not shy about interest rates!

Answer 4

If you filed a joint return and you're not responsible for the debt, but you are entitled to a portion of the refund because you reported income, payments, or credits on the return, you may request your portion of the refund by filing Form 8379 (PDF), Injured Spouse Allocation. Attach Form 8379 to your original Form 1040 (PDF), Form 1040A (PDF), or Form 1040EZ (PDF) or file it by itself after you are notified of an offset. If you file a Form 8379 with your return, write "INJURED SPOUSE" at the top left corner of the Form 1040, 1040A, or 1040EZ. Because the IRS will process your allocation request before an offset occurs, filing Form 8379 with your original return may take 11 to 14 weeks from the date of filing to process your return.

If you are filing Form 8379 by itself, it must show both spouses' social security numbers in the same order as they appeared on your income tax return. You, the "injured" spouse, must sign the form. Follow the instructions on Form 8379 carefully and be sure to attach the required forms to avoid delays. Do not attach the previously filed Form 1040 to the Form 8379. Send Form 8379 to the Service Center where you filed your original return. Allow at least 8 weeks for IRS to process your allocation request. We will compute the injured spouse's share of the joint return for you. If you lived in a community property state during the tax year, we will divide the joint refund based upon state law. For additional information, FMS can be reached at 1–800–304–3107.
http://www.irs.gov/taxtopics/tc203.html
http://www.irs.gov/pub/irs-pdf/f8379.pdf