Tackling hidden tax debts: understanding injured and innocent spouse relief

Married couples might hide financial surprises. Some face tax debts, while others are unaware of secret actions. When this happens, one spouse may seek tax relief. You’ll be called upon to determine if they qualify for an injured or innocent spouse claim. As their tax expert, understanding the available remedies and form preparations is crucial.

Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you’ll have access to the full recording and the entire list of Q&As.   

Q: A spouse has no income and, therefore, has no tax payments. Can this person file an injured spouse to claim a child tax credit?

A: The IRS will allocate the credits, so the individual should file injured spouse to see if the IRS will allocate any of the credits.

Q: Can injured spouse be filed with an ongoing divorce?

A: Yes, as long as the taxpayers file a MFJ return so the injured spouse can receive their share of the refund. If they are divorced before the end of the year, they would each file their own return and then injured spouse is not required.

Q: If the spouse chooses head of household and they live apart, can they file injured spouse?

A: No, injured spouse is only filed when the taxpayers file MFJ.

Q: Can we do equitable last options for a spouse filing head of household who is single and living apart?

A: The innocent spouse must have filed a MFJ return for the year at issue. It doesn’t matter how they are filing now as a single person HOH.