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mudwalter
New Member

Filling jointly with installment agreement.

I have an installment agreement from the 2013 tax year. I just got married this November. Since my refund always gets taken and put towards my balance, would it be best for me and my wife to keep filing separately so that at least 1 of us gets a refund? If we file jointly will they put our whole refund towards my installment agreement? It would be nice to put a larger chunk towards my balance, but at the same time we could use the money from one of us getting a refund. Advice?

1 Best answer

Accepted Solutions
LeonardS
Employee Tax Expert

Filling jointly with installment agreement.

Yes, you could file as married separately. 

 

However, when you choose not to file jointly, you limit or altogether forgo several tax breaks and deductions including:

  • The child and dependent care tax credit
  • The adoption credit
  • The Earned Income Credit
  • Tax-free exclusion of U.S. bond interest
  • Tax-free exclusion of Social Security benefits
  • The credit for the elderly and disabled
  • The deduction for college tuition expenses
  • The student loan interest deduction
  • The American Opportunity Credit and Lifetime Learning Credit for higher education expenses
  • The deduction of net capital losses
  • Traditional IRA deductions
  • Roth IRA contributions

Your other filing option is to have your spouse file for  Innocent Spouse Relief.  This would allow her to keep her refund.

 

"...You must meet all of the following conditions to qualify for innocent spouse relief:

  • You filed a joint return that has an understatement of tax that's solely attributable to your spouse's erroneous item. An erroneous item includes income received by your spouse but omitted from the joint return. Deductions, credits, and property basis are also erroneous items if they're incorrectly reported on the joint return
  • You establish that at the time you signed the joint return you didn't know, and had no reason to know, that there was an understatement of tax and
  • Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax..." IRS Topic No 205

This link is to the IRS Topic No. 205 Innocent Spouse Relief (Including Separation of Liability and Equitable Relief) and has information that you may find useful.

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3 Replies
LeonardS
Employee Tax Expert

Filling jointly with installment agreement.

Yes, you could file as married separately. 

 

However, when you choose not to file jointly, you limit or altogether forgo several tax breaks and deductions including:

  • The child and dependent care tax credit
  • The adoption credit
  • The Earned Income Credit
  • Tax-free exclusion of U.S. bond interest
  • Tax-free exclusion of Social Security benefits
  • The credit for the elderly and disabled
  • The deduction for college tuition expenses
  • The student loan interest deduction
  • The American Opportunity Credit and Lifetime Learning Credit for higher education expenses
  • The deduction of net capital losses
  • Traditional IRA deductions
  • Roth IRA contributions

Your other filing option is to have your spouse file for  Innocent Spouse Relief.  This would allow her to keep her refund.

 

"...You must meet all of the following conditions to qualify for innocent spouse relief:

  • You filed a joint return that has an understatement of tax that's solely attributable to your spouse's erroneous item. An erroneous item includes income received by your spouse but omitted from the joint return. Deductions, credits, and property basis are also erroneous items if they're incorrectly reported on the joint return
  • You establish that at the time you signed the joint return you didn't know, and had no reason to know, that there was an understatement of tax and
  • Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax..." IRS Topic No 205

This link is to the IRS Topic No. 205 Innocent Spouse Relief (Including Separation of Liability and Equitable Relief) and has information that you may find useful.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

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mudwalter
New Member

Filling jointly with installment agreement.

Thanks for being so detailed. Just to clarify though, if we file jointly, they will apply our total refund to my balance correct? (assuming we didn't go the innocent spouse route)

DianeC958
Expert Alumni

Filling jointly with installment agreement.

Yes, your total refund for your married filing joint return will be applied to your back tax bill.

 

The other option is for your spouse to file the innocent spouse form to not have any refund due to their income and tax liability apply to your tax bill.

 

More information about Who Can Garnish an Income Tax Refund

 

Here is a link to the Innocent Spouse form

 

@mudwalter

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