MFS or MFJ with a hospital bill

[Sanmj0]

Hi,

I was wondering what to file given that for 3 years I ve been a sahm with no additional income. My husband is currently the main financial provider with our 2 kids.

I received a letter about a hospital bill that stated was never paid therefore sent to collections. It was from a long time ago and this letter was sent to an old address I lived in with a family member, but I had thought I was covered the whole time and given that I have moved about 3 more times since then, I kind of had no idea until I recently visited that family member. So I’m wondering what to file since I don’t want it to affect my husband- will the amount be offset from his refund? The past years we had done MFJ as he would claim our oldest and include me with no additional income. Thanks!

[BillM223]

If you filed MFJ, then you were included as a spouse (not as a dependent). I say that because it was not clear to me that this is what you meant.

So, you still owe this bill? That is not a tax issue.

But if you (or your husband, either one) pay this bill, then you may want to add the expense to your 2025 tax return (i.e. what you will do in early 2026). Note that deductible medical expenses have to be greater than 7.5% of your adjusted gross income, so it might not make any difference to your 2025 return anyway.

The offset would happen only if the debt was reported by the hospital district to the Treasury Department under its Offset Program. It could happen, or you might get ahead of that by paying the debt first. If you pay the collections agency, be sure to keep good records, because if the Treasury Dept. (which includes the IRS) makes an offset on your refund, you will need solid proof as to why no offset should have been made.

NOTE: this is not an issue of affecting your husband in isolation - the two of you are a unit, filing MFJ, even if you are a SAHM making no income. You are doing an important job, and you should say, "we" and "our" when it comes to taxes.

[xmasbaby0]

https://ttlc.intuit.com/community/refunds/help/what-is-a-refund-offset/00/26301

Reduced Refund      https://www.irs.gov/taxtopics/tc203

 NOTE: You can contact the IRS Treasury Offset Program Call Center at 1-800-304-3107 to ask if they have an offset for you on file. TurboTax would not have that information.

https://turbotax.intuit.com/tax-tips/tax-payments/who-can-garnish-an-income-tax-refund/L7cPPzDyc

[Opus 17]

Your federal refund cannot be offset by this bill.  Maybe your state, but it would depend on your state laws.  Also, if you were married and filed jointly when the expense was incurred, your spouse could not claim "injured spouse" to get out of it.  Only if the bill was incurred before you married, or you were married but filed separately that year. 

Filing separately would prevent the state from collecting on the debt IF you were unmarried (or married to someone else) when you incurred the debt, but would not stop the state from collecting the debt if you were married when you incurred the debt.  Filing separately usually results in higher tax, because many credits or deductions are disallowed or reduced.  Even assuming this debt can be collected via your state tax refund, it does not seem to make sense to file separately for the rest of your life (paying higher taxes every year in most cases) just to avoid paying it.  

I would contact the hospital and try and negotiate a settlement for a reduced amount.

[Opus 17]

@BillM223 

@xmasbaby0 

This type of bill is not collectible as a federal offset, unless it was a federal government hospital (a federal debt) -- like maybe the VA or something.     It could be a state offset depending on state law.

[Sanmj0]

@BillM223 yes, I was included as a spouse not a dependent. I do owe the bill, but because i was just made aware of that, it had already been sent to collections and so now I will be contacting them to see if I can set up some sort of payment plan. It was from California Medi-Cal (I had SCFHP). I believe I did get something from the IRS for a possible offset. 

The overall debt amount is slightly higher than my husband’s current monthly income, but due to changes he will be getting a significant cut in pay starting next month.

thanks for that side note reminder 😅

[TomD8]

The IRS cannot garnish a California Medi-Cal bill, but a creditor can garnish wages for unpaid medical bills, including Medi-Cal bills, if they win a judgment