Injured Spouse

[VeronicaGia]

Hey Soc!  Quick question:

My husband was diagnosed with a disease in Sept 2005 and has not worked since, so no income for 2006 except mine.  

Do you know:

1.  When we file our joint taxes including injured spouse, since he had no income in 2006, wouldn't the entire refund belong to "me?"

2.  Or would the IRS consider part of it "his" and therefore take some of it for state-owed arrears?  

Thank you for any and all help.  :)

[socrateaser]

I'm gonna spank you. NEVER allow yourself to build up a tax refund. Change your W-4 to make sure you owe a small amount, so you're never in the position of having to ask this question.

Anyway, the answer to your question depends on the treatement of marital property under state law.

So, what state are you in?

Alternatively, if you can afford to file married filing separately (i.e., some of your deductions/exemptions/credits may be limitted), then do it, because the IRS can't intercept your refund unless the return is joint.

[FLMom]

>I'm gonna spank you. NEVER allow yourself to build up a tax
>refund. Change your W-4 to make sure you owe a small amount,
>so you're never in the position of having to ask this
>question.

OK, I've gotta ask. Why should you never build up a refund? Are you saying this because you know the poster personally, or is it that there's another reason?

(Reason I'm curious----we tried----hubby changed his dependents on his W-4 to get more income every paycheck. His income stayed the same, mine fluctuated, and we got back almost the same amount we had the year prior--ugh.)

Thanks for all you do Soc!
FLMom

[Ref]

it benefits everyone to avoid a refund at the end of the year, financially speaking. By overpaying the government you are basically giving the IRS an interest free loan. It would benefit you to have that $ in your savings account/CD all year so you can earn the interest and pay it up in April. This is assuming you have the willpower to avoid tapping into the tax money during the year.

Soc, forgive me if I am wrong, I think what he is saying is that if they pay as little as possible until April, then the opposing party wouldn't have a refund to attach. - smart!

FYI - I am a public accountant, so I know more about taxes and less about law.

Ref

[socrateaser]

BTW, are you a CPA?

[socrateaser]

>OK, I've gotta ask. Why should you never build up a refund?
>Are you saying this because you know the poster personally, or
>is it that there's another reason?

See ref's post.

>(Reason I'm curious----we tried----hubby changed his
>dependents on his W-4 to get more income every paycheck. His
>income stayed the same, mine fluctuated, and we got back
>almost the same amount we had the year prior--ugh.)

You can change your W-4 every pay period if you want. And, any of the major tax software packages can help you calculate your withholding and likely end-of-year tax liability. So, you should start the year paying very little in -- put some aside in savings in case you miscalculate and then as the year progresses keep increasing your payments until at the end you owe less than $1,000 (that's the threshold over which penalties may attach for underestimating).

[mistoffolees]

Careful!!!!

I'm not a CPA and don't play one on TV. However, I think there's an additional risk. If you underpay your taxes by more than a certain percentage in any given quarter, you can be penalized (and the penalty is pretty significant, IIRC). You need to make sure that you're putting in enough each quarter. If you start the year putting very little in and then make it up late in the year, you could be in violation.

I don't know if they actually do this or not, but the tax code states that it will happen. The idea is to prevent someone from paying much tax until the last day of the year and then putting their entire payment in. They would be earning interest on the money for the whole year at the IRS's expense.

[Ref]

NM

[VeronicaGia]

Spank away!  :)

We are in MI, the court order for CS arrears is in CA.  I do have H&R block software which lets the user (me) look at filing married/joint and married/separately to see which works best.

Actually, if we hadn't refinanced the house last year we probably wouldn't be looking at a refund at all, or it would have been so small it wouldn't have mattered, but now we have more deductions that I originally anticipated.  I did change my exemptions last year to try to not only avoid a refund, but honestly we need every penny we can get with every paycheck.

Thank you to and everyone who replied!

[socrateaser]

>Spank away!  :)
>
>We are in MI, the court order for CS arrears is in CA.  I do
>have H&R block software which lets the user (me) look at
>filing married/joint and married/separately to see which works
>best.
>
>Actually, if we hadn't refinanced the house last year we
>probably wouldn't be looking at a refund at all, or it would
>have been so small it wouldn't have mattered, but now we have
>more deductions that I originally anticipated.  I did change
>my exemptions last year to try to not only avoid a refund, but
>honestly we need every penny we can get with every paycheck.
>
>Thank you to and everyone who replied!

I just had a lightbulb go off in my head! File separately, get the refund, then amend your return and file jointly, if that gets you more deductions.

DUH!