I owe taxes from 3 previous years and I am on a payment plan with the IRS, HELP!?

Question

I owe taxes from 3 previous years and I am on a payment plan with the IRS, if we file this year (I just got married in October of '07) as married joint, will the IRS then take out of our refund together, what I still owe them when I was single/filed previously?

Answer 1

If you file separate returns, your spouse's refund will be safe. Period. However filing separately is usually not the best idea as you'll often pay a higher total tax that way.

If you file a joint return your spouse should attach Form 8379 to your return to protect their portion of the refund. Although that can be filed that after the fact, I'd highly suggest you file a paper return and attach the Form 8379 to it to ensure that it is processed as expeditiously as possible.

With the Form 8379, the IRS will allocate your spouse's proportional share of the refund to him and capture your share and apply it to your tax debt. How it will be divided will depend upon state law. If you live in a common law state, he'll get a proportional refund, based upon your proportional income and how much was withheld from his pay. If you live in a community property state, he'll get half of the refund regardless of any proportional division.

You can minimize or eliminate any offset if you carefully calculate your withholding allowances at your jobs. If you have a small debt at tax time there will be nothing to offset and you won't have to bother with the Form 8379. As long as you keep that debt to less than $1,000 there will be no penalties or interest due at filing time. This is completely legal and one way to beat the system.

Answer 2

If you do nothing, the entire joint refund can be applied to your back taxes.

You *may* be able to file jointly and attach an injured spouse form, though if you live in a community property state like California, state law allows the IRS to take all of the refund no matter what forms are filed. ("Half" is a misnomer. If you owe a lot of back taxes and live in California, he could get 0% back; In Texas, he might get 25%.)

And, the refund offset will *not* count as a payment on your payment plan.

If you do decide to file the 8379, it can be done one of three ways. File electronically with the form, file on paper with the form or mail the form in after the fact. The form will delay your refund by an extra 6-8 weeks.

Answer 3

The new liability will default your current installment agreement. You can prevent that by calling the IRS and asking them to revise your current agreement to include the new balance. That way, once it posts it will be added to the agreement automatically and you won't have to do anything. There will be a one-time $45 fee to revise the agreement which will come out of a future payment and you may have to increase your monthly payment amount depending on how much you owe for 2010. I'm assuming you don't owe more than $25,000 in taxes altogether. If so, a financial statement would be required.

Answer 4

Basically, Bostonia is correct. I suggest filing separate returns now and then filing amended joint returns later when the tax liabliity is paid off to get a retund of the difference between separate returns and jiont returns. That must be done within three years of the due date of your original return. I.e., for 2007, the amended return would have to be filed on or before April 15, 2011.

Jim Kirby, CPA

Answer 5

Yes they will, unless your husband files an injured spouse form to separate out his share of the refund from yours - then they'll only take your share.

Answer 6

Most likely, unless it doesn't fit into the payment plan you got going on with them.

Answer 7

yes they will garnish both of your checks

Answer 8

Just call them .......