Yup, the tax code can get complicated.
But don’t worry, we’ve done all the hard work for you. We’ve answered the questions you are most likely looking for.
What do I need to bring?
Don’t make a second trip. Find out everything you need bring.
This information is used to show the IRS and State that you are who you say are. Without this information, your refund may be delayed as the IRS looks into tax fraud.
- Identification (Driver’s License)
- Social Security Card or Tax ID Number
- Your Spouse’s ID and Social Security Card
- Certificate of Indian Blood (CIB)
- Birth Certificate
Just like your personal information, the IRS wants proof of your dependents’ identification and wants to make sure you claim them as a dependent.
- Social Security Card
- Birth Certificate
- School Demographics or Records
- Medical Records
- Proof of Benefits Statement
- Rent Agreement or Landlord Statement
- Certificate of Indian Blood (CIB)
- indian Tribal Statement Letter
- Childcare Records
- Income of dependents (if applicable)
- Form 8332 (if applicable)
If your are claiming any of the following credits below, please click on their corresponding links to see acceptable documents as defined by the IRS:
Please note that you will not need every item listed below as some may not apply to to you. Also note that you may fall into several categories throughout the year, even if it was for a small portion of the tax year. Bring as much of this information as possible.
Employed:
- W2 from each of your employers
Unemployed:
- Proof of Unemployement (Form 1099-G)
- State Tax Refund (Form 1099-G)
Self-Employed:
- Form 1099-NEC, Form 1099-MISC
- Schedule K1
- Records of All Expenses (Receipts, etc.)
- Records of All Income (Invoices, etc.)
- Records of Estimated Tax Payments (1040ES)
- Business Asset Use Information
- Office in Home information, if applicable.
- Pension/IRA/Annuity (Form 1099-R)
- Social Security Income (Form 1099-SA)
- Railroad Retirement Benefits (RRB)
- Records of rental income and Expenses.
- Rental Asset Information
- Records of Estimated Tax Payments (1040ES)
- Interest & Dividend Income
- Income from Sales of Stock/Property
- Health Savings Account & Reimbursements
- Investment Related Expenses
- Records of Estimated Tax Payments (1040ES)
Other Income/Losses:
- Gambling Income records (Form W-2G)
- Jury Duty Records
- Prizes and/or Awards
- Trusts
- Royalty Income (1099-Misc)
- Record of Alimony Paid
- Hobby Income
We want to help you keep as much of money as you can in your pocket. Help us save you money by bringing in any of these applicable documents;
Home Ownership:
- Form 1098
- Mortgage Interest Statements
- Real Estate & Personal Property Tax Records
- Receipts for Energy-Saving Improvements
Medical Expenses:
- Amounts Paid for Healthcare Insurance
- Amounts Paid to Doctors & Hospitals
- Fees Paid to a Day/Family Care Center
- Wages Paid to a Baby-Sitter
- 1098-T from Educational Institutions
- Receipts for Qualified Educational Expenses
- Records of any Scholarships or Fellowships
- 1098-E Showing Student Loan Interest
K-12 Educator Expenses:
- Receipts for Classroom Expenses
Retirement & Other Savings:
- Form 5498-SA Showing HSA Contributions
- Form 5498 Showing IRA Contributions
Charitable Donations:
- Cash Donated to Charitable Organizations
- Records of Non-Cash Charitable Donations
- Miles Driven for Charitable Purposes
Filing Status Types
Find out which filing status fits your personal situation.
Your filing status is used to determine your filing requirements, standard deduction and your eligibility for certain credits.
In a nutshell, this is how the IRS will treat all the rules and conditions that will apply to you. Please note that it is possible for you to fall into several of these status types. Always choose the one that will require you to pay the least amount of taxes.
You are married and both you and your spouse agree to file a joint return. (On a joint return, you report your combined income and deduct your combined allowable expenses.) Remember, you have to have been married by the last day of the tax year (Dec 31st).
Note that sometimes filing Jointly can push you and your spouses combined income into another tax bracket than if you filed individually. In some cases, but certainly not all of them, it might be wise for couples to decide that they will continue to file separately as a means of keeping their liabilities as limited as possible.
For 2022, the standard deduction amount for those filing jointly is $25,900.
This is your filing status if you are married and file a separate return from your spouse. If you choose to file Married Filing Separately, special rules apply. Because of these rules, you will usually pay more tax on a married filing separate return than any other filing status to which you may qualify under.
This method may benefit you though if you want to be responsible only for your own tax or if this method results in a lower tax obligation overall.
For 2022, the standard deduction amount is $12,950 for couples filing MFS.
You must meet the following requirements to claim this status:
- You are unmarried or considered unmarried on the last day of the year (Dec 31st).
- You paid more than half the cost of keeping up a home for the year. These costs include:
- Actual Rent (Not rental Value).
- Mortgage interest.
- Real estate taxes.
- Homeowner’s or renter’s insurance.
- Repairs/maintenance including upkeep.
- Utilities (heat, water, light, phone, etc.).
- Food eaten in the home.
- You cannot include the following costs:
- Clothing.
- Education.
- Medical treatment.
- Vacations.
- Life insurance.
- Transportation.
- A qualifying person lived with you in the home for more than half the year (except temporary absences, such as school). However, your dependent parent does not have to live with you.
For 2022, the standard deduction amount for those filing Head of Household (HoH) is $19,400.
If you plan on claiming the Head of Household (HoH) filing status, please see the HoH – Acceptable Documents as defined by the IRS.
This status may apply if you have lost a spouse, have a dependent child, and meet other conditions.
- You have to have paid more than half the cost of maintaining a primary home for you and your child for the entire year, except for temporary absences.
- You have to remain unmarried by the end of the tax year.
- If you have not remarried, you can use this as your filing status for 2 years following the death of your spouse. This gives you the benefit of using the joint filing rates (MFJ) and the highest standard deduction amount.
- If your spouse died during the tax year, you may file a joint tax return using the Married Filed Jointly Status (MFJ).
For 2022, the standard deduction amount for those filing as a Qualifying Widow(er) is $25,900.
If you still have questions which filing status is right for you, we have knowledgable Tax Experts at our office waiting to answer your questions. Stop in and we’ll make sure you get the most out of your return. Can’t make it in? No problem! Give us a call at 505-863-2489, or send us an email to reception@mangumtax.com
You can also take advantage of the IRS “What’s My Filing Status” Tool. It will run you through a questionnaire that will return the best filing status based on the information you input.
Tax Deadlines
Find out when you need to file your taxes by and learn about the benefits of filing early.
For individuals, the federal income tax deadline falls on the 15th of April every year unless the date falls on a weekend, or a federally recognized holiday. If this happens, the deadline will push to the next available weekday or non-holiday.
The holiday most responsible for pushing out the deadline is April 16th (Emancipation Day) which celebrates the abolishment of slavery. If April 15th lands on a Sunday, then the deadline will push to April 17th due to the federally recognized holiday landing on Monday.
Reduce Fraud & Identity Theft Attempts:
- If you file your tax return early in the season, you’re less likely to become a victim of a fraudster trying to collect a refund in your name. Criminals tend to file fraudulent returns early in the year to try and get to the IRS before you. They won’t be able to file in your name if you’ve already completed your return, so file early to better protect yourself.
- Fraud & Identity issues on your federal return can delay your refund by up to 120 days (4months) with the IRS. Don’t increase the odds of getting your refund late.
Faster Refund:
- If you are looking to receive a refund, filing taxes early can mean money in your hands sooner. This means more time to plan ahead for financial speed bumps, or even an early vacation.
- By filing early, you will find out exactly what your tax liability looks like and how much you are going to owe the IRS by the April 15th deadline. This can give you valuable time to save up over the next couple of months instead of scrambling to come up with funds in the last few weeks.
- As the April 15th deadline approaches, more taxpayers will be filing taxes, and our office will become busier. Avoid the line by filing early, and get more time to get your questions answered by our Tax Experts.
While an extension gives you extra time to file your return, it does not give you extra time to pay your taxes. Payments are still due by the April 15th deadline each year (unless April 15th is a weekend, or a federally recognized holiday), but an extension can help reduce your penalties if you can’t afford to pay in full by the deadline.
It is also important to note that if you are expecting a refund, and don’t owe tax payments to the IRS then you will not need to file for an extension. The April 15th deadline is for those who owe on their federal tax return. The IRS will allow you up to 3 years to file any tax returns that you were expecting a refund on. Just don’t forget to file your taxes within those 3 years, or the IRS won’t grant you your previous refunds.
If you do need to file for an extension, reach out to us and we will help you to file your extension. An extension will push your deadline to submit your return out to October 15th.
Don’t wait any longer to file your taxes if you going to owe. The longer you wait, the worse it gets since the clock starts ticking after the April 15th deadline. The IRS is going to charge you 5% each month that you are late to file, up to 25% of the taxes that you owe.
On top of the “Late to File Fee,” the IRS is going to charge you every month that you fail to make your payment on time by 0.5% of the taxes that you owe capping at 25% of the total taxes.
This means that if you don’t file and you don’t make your payments, you are looking at a whopping 5.5% on top of the money you already owe each month just in penalties. It is also important to note that the IRS charges interest daily. Don’t make the mistake to just wait until the next month since you have already been penalized by the IRS for the month.
Every day counts when you owe the IRS. Pay it as soon as you can.
If you need help with your payments, you may qualify for a Payment Installment Plan with the IRS. Or, we can help you file (Form 9465) for the same request.
The IRS might waive the late payment penalty if you can show that there’s a reasonable and justifiable reason for the late payment. They can also waive the late filing penalty if you can establish that you didn’t file your return on time for reasonable cause, such as illness or some other unforeseen event.
You will typically receive a statement from the IRS that has a Toll-Free number that you call to apply for relief. For more information visit the IRS Penalty Relief site.
Dependents
Everything you need to know about dependent related questions.
A dependent is a person, other than you or your spouse, for whom you could claim an exemption. To be your dependent, a person must be your qualifying child (or your qualifying relative).
If you would like to claim your child as a dependent on your tax return, you will need to ensure that they meet ALL of the conditions listed below:
- Must be your child, stepchild, foster child, adopted child, sibling, half sibling, grandchild, niece, or nephew.
- If the child is a non-student, The child must be under the age of 19 and be younger than you.
- If the child is a student, they must be under age 24 and be younger than you. In order to qualify your dependent as a student, they must have gone to school full-time (as determined by the school) for at least 5 months out of year. These months do not have to be consecutive.
- If your child does not meet the age requirements, then they must be permanently or totally disabled.
- The child must have lived with you for more than half of the year.
- The child must not have provided more than half of his/her support for the tax year. (Scholarships are not considered as support).
- The child must not be filing a joint return for the same tax year.
- The child’s gross income was less than $10,500.
Note: If your child was born, or dies during the tax year (so long as they were living in your home) they are to be considered as living with you for the entire year.
If you would like to claim your relative as a dependent on your tax return, you will need to ensure that they meet ALL of these conditions listed below:
- The person cannot by anyone’s qualifying child.
- The person must live with you all year as member of your household.
- The person’s gross income for the year must be less than $4,200.
- You generally must provide more than half of a person’s total support during the calendar year.
A person who is a dependent may still have to file a return. It depends on his or her income, age, martial status, and other factors.
Reminder: If a dependent child or relative must file an income tax return but can’t file due to age or any other reason, a parent, guardian, or other legally responsible person must file it for the child or relative.
Generally, Single Dependents under the Age of 65 should file if their unearned income was more than $1,050 and/or their earned income was more than $12,000.
Generally, Single Dependents over the Age of 65 should file if their unearned income was more than $2,650 and/or their earned income was more than $13,600.
Generally, Married Dependents under the Age of 65 should file if their unearned income was more than $1,050 and/or their earned income was more than $12,000.
Generally, Married Dependents over the Age of 65 should file if their unearned income was more than $2,350 and/or their earned income was more than $13,300.
Typically, the parent who has primary custody of the child for the calendar year may claim the child as their dependent. The custodial parent is determined by the number of nights the child resided with the parent.
If your child has spent an equal amount of time with the other parent, the parent with the higher adjusted gross income (AGI) is allowed to claim the child as their dependent.
The custodial parent may waive claiming the dependent if they decide, but they must meet ALL of the following conditions:
- The child’s parents are divorced or legally separated, or lived apart at all time during the last six months of the calendar year (this includes parents who were never married and who not live together).
- One or both parents provided more than half of the child’s total support. Note that if a parent has remarried, support from the parent’s spouse is considered as support from the remarried parent.
- One or both parents have legal custody of the child for more than half of the year.
- The Custodial Parent fills out Form 8332 stating that he/she will not claim the child as their dependent and the non-custodial parent attaches the filled out form to their tax return.
Although you may have provided financial support, you may only claim the child if they lived with you for at least six months of the tax year and if you provided more than half of their living expenses for the tax year.
However, if you have a signed Form 8332 from the custodial parent releasing the dependency exemption, then you can claim your child as your dependent.
Typically, the parent who has primary custody of the child for the calendar year may claim the child as their dependent. The custodial parent is determined by the number of nights the child resided with the parent.
If your child has spent an equal amount of time with the other parent, the parent with the higher Adjusted Gross Income (AGI) is allowed to claim the child as their dependent.
The custodial parent may waive claiming the dependent if they decide, but they must meet ALL of the following conditions:
- The child’s parents are divorced or legally separated, or lived apart at all time during the last six months of the calendar year (this includes parents who were never married and who not live together).
- One or both parents provided more than half of the child’s total support. Note that if a parent has remarried, support from the parent’s spouse is considered as support from the remarried parent.
- One or both parents have legal custody of the child for more than half of the year.
- The Custodial Parent fills out Form 8332 stating that he/she will not claim the child as their dependent and the non-custodial parent attaches the filled out form to their tax return.
Because the IRS requires to have the SSN listed on your tax return in order to be claimed as dependent, either you or the dependent should apply for an SSN as soon as possible by filing an Application for a Social Security Card (Form SS-5) with the Social Security Administration.
It usually takes about 2 weeks to get an SSN once the Social Security Administration has all the information it needs. If you don’t have a required SSN by the filing due date, you can file an Application for Automatic Extension of Time To File U.S. Individual Income Tax Return (Form 4868) for an extension on the time to file.
However, If your dependent doesn’t have a SSN and can’t get an SSN, they must have an Individual Taxpayer Identification Number (ITIN) or an Adoption Taxpayer Identification Number (ATIN). If you need to apply for one, you can fill out Form W-7.
Earned Income Credit (EIC)
1 in 5 people who could qualify for EIC in 2018 didn’t even apply. Don’t miss out!
The Earned Income Credit (EIC) helps low to medium income taxpayers. To qualify, you need to meet certain requirements. The EIC is subtracted from what you owe on your tax return and can possibly lead to a larger refund, which means more money in your pocket.
This credit is called the “earned income” credit because, to qualify, you must work and have earned income. If you are an employee, earned income includes all the taxable income you get from your employer.
Examples of Earned Income:
- Wages
- Salaries
- Tips
- Union Strike Benefits
- Long Term Disability Benefits
- Any taxable Pay
- Net Earnings from Self-Employment
- Pensions
- Annuities
- Welfare Benefits
- Unemployment Compensation
- Worker’s Compensation Benefits
- Social Security Benefits
- Social Security Disability Insurance (SSDI)
- Military Disability Pension Payments
- Interest & Dividends
- Alimony
- Child Support
- Retirement Income
- Royalties
- Rents
- Dividends
In order to qualify, you must meet ALL of these requirements:
- You must file a Single, Head of Household, or a Joint Return.
- You must have been a US Citizen or Alien Resident all year.
- You cannot have any investment income over $3,500.
- You must have received some form of earned income.
- You plan not to file for the Foreign Earned Income Credit (Form 2555)
- You are not the qualifying child of another filer.
If you have NO CHILDREN, you can not qualify if you earned more than $16,480 if you plan to file Single, or as Head of Household. If you plan to file a Joint return with your spouse, together you must not have earned more than $22,610.
If you have ONE CHILD, you can not qualify if you earned more than $43,492 if you plan to file Single, or as Head of Household. If you plan to file a Joint return with your spouse, together you must not have earned more than $49,622.
If you have TWO CHILDREN, you can not qualify if you earned more than $49,399 if you plan to file Single, or as Head of Household. If you plan to file a Joint return with your spouse, together you must not have earned more than $55,529.
If you have THREE OR MORE CHILDREN, you can not qualify if you earned more than $53,057 if you plan to file Single, or as Head of Household. If you plan to file a Joint return with your spouse, together you must not have earned more than $59,187.
There are also two tools available to help you determine if you qualify from the IRS. The first tool is a Yes & No Questionnaire, and the second is an Assisted Interactive Tool. Feel free to take a look at both for more information.
The maximum amount of credit for Tax Year 2018 is:
- $6,431 with three or more qualifying children.
- $5,716 with two qualifying children.
- $3,461 with one qualifying child.
- $519 with no qualifying children.
You absolutely can. If you have already filed for the year in question we will need to file an amended return for you, but if you haven’t filed at all we can get you started.
You may need to hurry though, here are the IRS deadlines for previous years:
- For 2015, you need to file your tax return by April 15, 2019.
- For 2016, you need to file your tax return by April 15, 2020.
- For 2017, you need to file your tax return by April 15, 2021.
- For 2018, you need to file your tax return by April 15, 2022.
You always want to make sure that you are providing your Tax Expert with as accurate information as possible so that we can help to avoid any errors.
If the error was due to reckless or intentional disregard of the rules, the IRS could ban you from claiming EIC for the next two years. On the other hand, if the error is because of fraud, the IRS could ban you from claiming EIC for the next ten years.
Not only could an error prevent you from filing for EIC in the upcoming years, it could also cause a delay in your tax refund by up to 2 months while the IRS spends time correcting the error. The IRS will also ask that you pay back the amount of the EIC plus interest.
To help avoid any potential errors, please be sure to bring as much documentation as you can. We’ll make sure everything goes smooth!
Here is a list of Acceptable Documents for the EIC as defined by the IRS.
IRS Letters
Got a letter from the IRS? Find out what it means and what you may need to do.
The IRS send Letters and Notices for the following reasons:
- You have a balance due.
- You are due a larger or smaller refund.
- They have a question about your tax return.
- They need to verify your Identity.
- They need additional information.
- They changed your return.
- They need to notify you of delays in your return.
Remember that it is important to keep a copy of all notices or letters with your tax records. You may need these documents at a later time.
The income/payment information that was reported on your tax return doesn’t match records that the IRS received from a Third Party (such as your employer or your financial institution). These differences may cause changes to your tax return such as a decrease or increase to your tax. In some cases, these differences may not cause any changes to occur at all.
Some common errors that we see include: not reporting one of your jobs on your tax return, or providing a W2 that shows only a portion of your time worked at a job.
In most CP2000 notices, you will have a Response Form attached to your letter that will give you an opportunity to respond to the changes made to your tax return.
If you agree with the changes made by the IRS, you can simply follow the instructions by signing the form (if you filed jointly, both spouses will need to sign) and mail it back to IRS with the envelope they included.
If you disagree with the changes, there will be detailed instructions on the Response Form for your next steps. You will need to include a signed statement of why you disagree and attach any supporting documents that you would like the IRS to consider. Be sure to include your phone number and the best time for them to call you. You may also want to contact the 3rd Party that provided the incorrect information to the IRS and ask to have them correct it.
Please note that if the notice letter states that your tax will increase, you will be responsible for paying the IRS for the increase. Remember, the IRS charges interest on any unpaid balance until it is paid in full. Though the letter is not a billed invoice, you can expect to receive one at a later point once the response has been completed. If for some reason, you cannot pay the amount in full, the IRS has a payment plan application.
For more information, please visit the IRS’ website about your CP2000 Notice. Or, watch the IRS CP2000 Video on YouTube.
You have received this letter from the IRS because they believe that you may be a victim of Tax Identity Theft. Recently, the IRS has increased their security measures to flag cases earlier and to cover more types of red flags. If you received this letter, you will want to call the IRS ID Verification Number on your letter so they can verify your identity and finish processing your Federal Income Tax Return.
Before you call, make sure that you have the following documents ready:
- Your 4883C Letter
- Your Federal Income Tax Return (Form 1040)
- A Previous Year’s Tax Return (if you filed with us, request copies)
- Supporting Documents (W2s, 1099s, Schedule C, etc.).
If you fail to call the IRS, they may not be able to process your tax return, issue refunds, or apply any overpayments to the following tax year.
Please note once the IRS has confirmed your identity, it may take the IRS an additional 9 weeks (2 months) to process your tax return and may cause delays in your refund.
For more information, please visit the IRS 4883 Notice page. They also have a helpful PDF you can view as well.
You have received this letter from the IRS because they believe that you may be a victim of Tax Identity Theft. Recently, the IRS has increased their security measures to flag cases earlier and to cover more types of red flags. If you received this letter, you will want to call the IRS ID Verification Number on your letter so they can verify your identity and finish processing your Federal Income Tax Return.
Before you call, make sure that you have the following documents ready:
- Your 5071-C Letter
- Your Federal Income Tax Return (Form 1040)
- A Previous Year’s Tax Return (if you filed with us, request copies)
- Supporting Documents (W2s, 1099s, Schedule C, etc.).
If you fail to call the IRS, they may not be able to process your tax return, issue refunds, or apply any overpayments to the following tax year.
Please note once the IRS has confirmed your identity, it may take the IRS an additional 9 weeks (2 months) to process your tax return and may cause delays in your refund.
For more information, please visit the IRS 5071-C Notice page. They also have a helpful PDF you can view as well.
This letter is a notice from the IRS that a Dependent that you claimed on your tax return has already been claimed by another tax payer.
We would recommend first double checking the Social Security Number (SSN) of the dependent on your tax return to their actual card to ensure these numbers are the same, and it wasn’t just a typo error. If they are the same, you may want to double check the requirements for claiming a dependent as the IRS may have determined that you are ineligible to claim them. Please keep in mind that unfortunately, the IRS will not be allowed to tell you who claimed your dependent as they are restricted by disclosure laws to do so.
If the numbers didn’t match, you don’t need to make any corrections until your next tax return and you shouldn’t have to contact the IRS. If you have any questions you can also get in contact with us to look into your letter in more details.
For additional information, you can visit the IRS’ CP87A Notice page.
The IRS will issue a CP12 Notice if they have corrected one or more mistakes on your tax return and the change results in a payment becoming an overpayment, or an original overpayment amount has been changed.
If the IRS corrects a payment and it becomes an overpayment, you can expect a refund from the IRS for the difference in about 4-6 weeks as long as you don’t owe any other debt that the IRS is legally obligated to collect on.
If you agree with the changes made by the IRS, there is no response or action needed by you. However, if you disagree with the changes made, you will want to contact the IRS within 60 days of date of your letter. Remember, that if you don’t contact them in the allotted time, you’ll lose your right to appeal their decision and requests will have to be substantiated.
You can contact them by phone, or by mail, but by phone is typically faster as they can respond quickly to verbal responses. On rare occasion, you may need to fax them supporting documents, or mail them in.
If you have questions regarding the changes, the IRS should have provided a toll-free number on the top right of the letter that you can call to ask for specific information on your tax return.
For additional information, please visit the IRS CP12 Notice page.
Marital Status
Have a unique marital status? Find out how it may impact you.
If you are unmarried on the last day of the tax year (December 31st), you may be eligible to file as single, head of household, or as a qualifying widow(er).
If you are legally married on the last day of the tax year (December 31st) you have the option to file as Married Filing Joint (MFJ) or Married Filing Separate (MFS).
You can be considered as legally married if by the end of the year (December 31st) you entered into a common-law marriage that is recognized by the state in which you reside in, or alternatively your common law marriage began in a state that recognizes the marriage.
Generally, most common law marriages must follow these legal standards, but they may vary depending on your state:
- Both parties must have the legal capacity to marry.
- Both parties must have the intent to get married to one another and must have communicated that intent to one another.
- Both parties must live together.
- Both parties must represent themselves to others as a married couple.
- Alabama
- Colorado
- District of Columbia
- Georgia (if created before 1997)
- Idaho (if created before 1996)
- Iowa
- Kansas
- Montana
- New Hampshire (for inheritance purposes only)
- Ohio
- Oklahoma
- Pennsylvania (if created before 2005)
- Rhode Island
- South Carolina
- Texas
- Utah
As of 2015, the U.S. Department of the Treasury and the Internal Revenue Service have ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes.
The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.
This means that the ruling applies to all federal tax provisions where marriage is a factor, including those related to filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit.
Injured Spouse Allocation
Need help with understanding if you should apply for the allocation?
All income tax refunds are subject to an offset against any past due debts. These debts might include past due federal or state income taxes, student loans, child support payments, or state unemployment compensation.
When taxpayers file jointly and only one spouse owes a past due amount, the other spouse can be considered an “injured spouse.”
If you don’t want your refund to be offset by a past due debt that belongs to your spouse, you may want to either file as “Married Filing Separately (MFS) or file Form 8379 (Injured Spouse Allocation) when filing jointly.
By filing Form 8379 (Injured Spouse Allocation) with your joint return, your share of the refund will not be offset by your spouse’s past due debts so long as the following apply:
- You are not legally obligated to pay the past due debt.
- You made or reported tax payments or claimed a refundable tax credit.
You should file for the allocation when you become aware that all or part of your refund share (or you expect it to be) is offset against your spouse’s legally enforceable past-due obligations.
You should file with Form 8379 (Injured Spouse Allocation) for each year that you meet this condition and want your portion of any offset refunded.
The Bureau of Fiscal Services (BFS) may use part or all of your tax refund to pay certain debts such as:
- Federal tax debts.
- Federal agency debts like a delinquent student loan.
- State income tax obligations.
- Past-due child and spousal support.
- Certain unemployment compensation debts owed to a state.
The BFS will typically mail you a notice if it offsets any part of your refund to pay your or your spouse’s debt. The notice will list the original refund and offset amount. It will also include the agency that received the offset payment and their contact information.
If you or your spouse wish to dispute the offset and choose not to file Form 8397 (Injured Spouse Allocation), you should contact the agency that received the offset payment.
Community Property
Curious how Community Property works? See if it may apply to your state.
Community property is everything a married couple own together. This typically includes all money earned, debts incurred, and property acquired during the marriage. Generally, this property is divided equally among the married couple regardless of who earned the money, debts, and/or property.
There are 9 states that currently recognize the community property laws for tax purposes:
- Arizona (AZ)
- California (CA)
- Idaho (ID)
- Nevada (NV)
- New Mexico (NM)
- Texas (TX)
- Louisiana (LA)
- Wisconsin (WI)
- Washington (WA)
Community property laws don’t just apply to couples living in one of the community property states. If you or your spouse lives or owns property in a community property state, those rules could determine the status of the property.
Without getting into fine details, the following are generally considered to be separate from community property:
- All property owned by a spouse prior to marriage.
- Any property obtained by a spouse after a legal separation.
- Any property received as a gift or inheritance during the marriage from a third party.
- Any debts obtained prior to a marriage.
Under community property, spouses own – and owe – everything equally, regardless of who earns or spends the income. Therefore, in the event that your spouse passes away, you would generally be considered the owner of any property that you jointly held together or any property that your spouse owned at the time of their death.