Unemployed spouse due to health related issues. Defaulted on student loan prior to marriage, with collections in "Certified for offset" payment program.

[interpol_untitle]

I live in Texas.  Should I file a joint of separate return?  We were unaware of the defaulted loan, and last year filed a joint return, and my entire return was taken.  I had to file an injured spouse form after finding out, and received back half of my return some 10 weeks later.  With my wife not collecting unemployment, or any other form of government assistance, I'm not sure what I should do this year.

Is it possible to file without having my entire/half of my return taken again?  If I file a separate return claiming my 2 children, would I lose any money on my return?

[Coleen3 · Accepted solution]

Yes, filing a separate return is usually not beneficial. You should file an Injured Spouse form to recover your portion of the refund. As your spouse has no income this year, she will be an additional exemption on your return without the additional income. 

[interpol_untitle]

If I’m understanding correctly, the injured spouse form I need to fill out again for this year will be done when I submit my return?  And since I’m the only income, my return won’t be garnished again for my wife’s defaulted student loan?

[Coleen3]

Correct to the first question. Under ideal circumstances, it will not be. Most of the time the Form does what it is supposed to do, but there is no guarantee. I have seen a couple of instances in the past 27 years when the entire refund was taken.

[xmasbaby0]

TX is a community property state.

[interpol_untitle]

Correct about community property state.  I just didn’t think a spouse was obligated to pay for another spouses defaulted loans prior to marriage.