Injured and innocent spouse cases often require you to navigate complex tax situations clients are unprepared to face on their own. Mastering the nuances of these designations helps you advocate effectively while strengthening your reputation as a trusted advisor.
When you know how to identify eligible clients for the right relief, you deliver real solutions in moments of financial and personal stress for your clients.
Below, you’ll find a few of the top questions from a recent webinar on the topic and their corresponding answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.
Q: If the injured spouse does not work, but the couple has qualifying children for the child tax credit (CTC), earned income credit (EIC), etc., will the injured spouse get any of the refund?
A: If the credit was refundable, they may be eligible for a portion of the refund.
Q: What is tacit consent?
A: Tacit consent, also known as implied consent, basically says the spouse’s actions show they agreed to the signing of a joint return. For example, the spouse didn’t look at the return they were signing despite having an opportunity to do so. If the IRS finds a spouse gave their tacit consent to the filing of a return on their behalf, it is unlikely to grant innocent spouse relief.
Q: Is Form 8379 used only after going through the Taxpayer Advocate Service (TAS), filing Form 911, Request for Taxpayer Advocate Service Assistance, and finding the taxpayer didn’t qualify?
A: Form 8379 should be used when requesting injured spouse relief. If a taxpayer is eligible, most likely TAS would direct the taxpayer to file the form seeking relief.
Q: In general, does the IRS allocate the injured spouse refund based on the couple’s respective incomes? For example, if the injured spouse earned all the income and the other earned nothing but the refund was taken for the other spouse’s debt. Will the IRS refund the entire refund to the injured spouse?
A: The Internal Revenue Manual (25.18.5.4) says a spouse’s share of the joint liability is computed using the separate tax formula, as follows:
Injured spouse’s separate tax liability divided by the total of spouses’ separate tax liabilities multiplied by the joint tax liability shown on return equals injured spouse’s share of tax liability
To learn more about how to determine an injured or innocent spouse, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial.
About National Association of Tax ProfessionalsThe National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.
The NATP headquarters is located in Appleton, WI. To learn more, visit www.natptax.com.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing.