My wife and I filed a injured spouse form for the past couple of years. This is because I owe the IRS. I live in the state of AZ.

[jrwilson003]

Can someone explain how this works in AZ filing jointly and using the injured spouse form.  My portion always goes to pay off the debt I owe but I also have more deductions and a higher income. For the past couple of years she has gotten some money back but she thinks it lower then it should be. How does the IRS determine how much money should go to who? Our tax person tells her she should be getting back 50% although he told me something different. When I called the IRS a couple of years ago the person I spoke to seemed to explain that there is formula and they refunded her amount that she should have been owed regardless of what I owed to the IRS. Obviously my portion was used towards the rest of my back taxes. My taxes are now paid off and this year we filed jointly with out the need for the injured spouse form. I am just trying to do what is right and make sure what she has gotten in the past was owed to her was the correct amount.  

[BMcCalpin · Accepted solution]

Arizona is a community property state. Normally, this means that your income and deductions are split between you 50-50.

But injured spouse is not done this way.

Distilling it down, in a community property state, the income and deductions allocated to the injuring spouse are used to calculate the amount of the refund for that spouse (to be taken for the debt), but 1/2 of the remaining income and deductions is split between the two spouses (community property), so the injured spouse gets credit for only half of what remains.

So in the case that the two spouses made approximately equals amounts, the injured spouse would appear to get only 1/4th the income and expenses credited to her/him. It's worse, of course, if the injured spouse makes less than the other spouse.

The only consolation is that the debt gets paid off more quickly - as has apparently happened.

[jrwilson003]

Thanks for the response. In this case I make on paper about double that my wife does. She also has income from renting a chair and doing hair and she does have quite a few write offs.  I also paid in about 12K last year and she was around 2K. I am able to write off about 13K because mostly the amount of mileage I claim because I travel quite a bit with my personal car. So if I understand this correctly she should have received what she got back? Or should she have received more?

[BMcCalpin]

I suspect that she received the correct amount - from what you have said, her cut of the refund would have been small, for the reasons I stated above.

[finance2]

There are four different Revenue Rulings covering the various CP states. They are not all treated the same and the IRS respects state law on what does and does not constitute CP/SP. See the links under Line 5a on the Instructions for 8379.