In the eyes of the law, a married couple is a single entity who shares income, property, assets, and debt. However, when it comes to filing taxes, the IRS may distinguish between the two people in a marriage if one owes a debt to the government.
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Instead of using the couple's joint refund to satisfy that outstanding debt, the IRS may be able to issue it to one of the spouses if they utilize the proper strategies when filing their taxes. These tips can help a couple safeguard their return even if one spouse owes back taxes.
CHANGE THE NUMBER OF EXEMPTIONS
One of the easiest ways that a person whose spouse owes an IRS debt can keep the couple's taxes safe would be by changing the number of exemptions claimed on his or her income. Lowering the number would allow the government to withhold more taxes out of the paycheck while raising the number would lower the taxes withheld.
Having more taxes withheld at work may eliminate the possibility of getting a tax refund later. Nonetheless, it would also satisfy the person's tax obligation to the government and also eliminate the chance that this person would owe money to the government because of the other spouse's outstanding debt to the IRS.
UTILIZE THE INNOCENT SPOUSE OPTION
If changing the number of exemptions is not a possibility, people can still try to safeguard their returns by utilizing the innocent spouse option. This option can apply during certain situations, including:
• When the tax debt belongs to a single spouse alone and occurred before the couple's marriage
• Paying the debt would create financial hardship for the couple
• One spouse has filed for divorce because of spousal abuse
• One spouse does not speak English as a first language
• The court issued a divorce decree that stipulated that one spouse pay the other's outstanding debt
If people plan to utilize the innocent spouse choice, they ideally should use a professional tax service to help them take advantage of this option.
USE THE INJURED SPOUSE OPTION
People who want to protect their refunds can also use the injured spouse option if they meet the outlined criteria. This option helps a tax refund be issued to one spouse rather than to the couple as a whole. As with the innocent spouse option, the injured spouse criteria includes:
• Proving that the tax debt occurred prior to the couple's marriage
• The debt is owed because of the spouse's outstanding child support, student loan, or spousal support obligation
• The couple is entitled to the EIC credit
• Paying the debt would likewise be unfair and cause financial hardship.
• If they are filing a paper return, it is essential that the couple write “Injured Spouse” at the top of their claim and file the form 8379. If they are unsure of how to utilize this option to their advantage, people should rely on a professional tax firm for help.
FILE A SEPARATE TAX RETURN
Many couples try to skirt their spouses' outstanding tax debt by
filing separate returns. They choose the married filing separate rather than married filing jointly option when preparing their returns.
However, this option may reduce the amount of the refund that either spouse will receive. They also may not be eligible for certain deductions, including the EIC, if they file married filing separate.
When a person owes a debt to the IRS, this person's spouse may still be able to receive some or all of the couple's expected refund. Before they file their taxes, they should know about these strategies that they can use to safeguard their returns and also receive the refund to which one or both of them are entitled.
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.
Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.
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