You’re an injured spouse when you file a joint tax return and your share of an expected refund was used to offset debts your spouse legally owes, such as past due federal or state tax, or student loans. As an injured spouse, you file Form 8379, Injured Spouse Allocation, to get your share of the joint refund.
You’re an innocent spouse when you file a joint return and your spouse omitted income or incorrectly reported items you didn’t know about and which caused an understatement of tax. In that case, you don’t want to pay tax that’s properly attributable to your spouse, and you file Form 8857, Request for Innocent Spouse Relief.
The difference between injured and innocent confuses both taxpayers and their legal representatives.
In T.C. Memo. 2014-243 (Palomares), the taxpayer separated from her husband in 2005. For tax years 2005 through 2008, she filed her federal income tax returns as head of household.
The IRS applied the refunds from those years to an unpaid liability on a 1996 federal return she had filed jointly with her husband.
A legal clinic helped the taxpayer file Form 8379, Injured Spouse Allocation, in an attempt to obtain the refunds.
The IRS denied the request, stating the taxpayer had used the wrong form.
Note: Taxing Lessons provides a summarized version of sometimes lengthy court decisions. The full case may include facts and issues not presented here. Please use the link provided to read the entire case.
Editorial note: The IRS sent a copy of Form 8857 with the explanation. The taxpayer eventually completed the correct form and obtained partial relief. The remainder was denied because the statute of limitations had run.