Don't Mess With Taxes

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The biggest problem for most of us in coronavirus lockdown with our families, whether ordered by state or local officials or self-imposed, is figuring out how to not get on each other's last nerve.

For some, however, the forced togetherness is deadly serious. Possibly just deadly.

Domestic violence since COVID-19 appeared has spiked as victims find themselves forced to stay home with abusers, according to those who work to protect people, still primarily women, from abusive partners and spouses.

It's happening globally, across the United States and here in Texas.

"During a time of extreme lockdown with the coronavirus, when people are not allowed to move around, it makes it exponentially more difficult for a victim of domestic violence in the home to go somewhere else," according to Leta Hong Fincher, author of "Betraying Big Brother: The Feminist Awakening in China."

Involuntary closeness concerns also are exacerbated by other coronavirus stresses, like job losses and the ensuring financial anxiety.

Many types of abuse: Physical violence obviously is the most worrisome, but there are other types of domestic abuse. It includes coercive, controlling behavior that involves emotional, psychological and even financial abuse.

In its financial iteration, the abuser uses money and financial tools to exert control over his or victim.

An abuser often limits the victim's access to money, doling out just enough so that the abused partner can barely make do in daily life. These reduced financial resources are why so many domestic abuse survivors stay in violent relationships.

Tax abuse troubles: Financial abuse can show up on taxes, too, as I noted in an earlier post on when taxes get tangled up in spousal abuse.

When a married couple files a joint return, they face joint and several liability for any due taxes. This tax law means that the Internal Revenue Service can come after either spouse for payment of a tax bill, even if only one spouse made most or all of the money and filled out the Form 1040.

This is a good reason for every spouse, even in very happy relationships, needs to carefully look over that return before affixing an e-signature or actual John Hancock.

But, as we know and has been so dramatically made apparent with the appearance of coronavirus, things that we don't expect happen.

In cases where a husband or wife discovers that a spouse has cheated incorrectly completed a tax return, the aggrieved spouse has options. The wronged marital filer can claim innocent or injured spouse status.

And the Internal Revenue Service takes abuse into account when considering both of these claims.

Here's a look on this Tax Form Tuesday at, of course, the forms used to file for either innocent or injured spouse status, as well as the differences, requirements and guidelines in these two spousal relief options.

Innocent tax spouse circumstances: Generally, an innocent spouse is one who filed a joint return, but was unaware that his or her husband or wife deliberately under-reported their shared tax liability. This status is requested by filing Form 8857, Request for Innocent Spouse Relief (an excerpt shown below), separately from the tax return in question.

Click here for full PDF Form 8857. Instructions available here.

Here, you let the IRS know how and why you believe only your spouse or former spouse should be held liable for the tax bill in question. If granted, the innocent spouse can be relieved of responsibility for paying tax, interest and penalties if a spouse or ex-spouse improperly reported items or omitted items on the joint tax return. Generally, the tax, interest, and penalties that qualify for relief can only be collected from your spouse or ex.

Note that you cannot electronically file an innocent spouse request. You must snail mail Form 8857 to:

Internal Revenue Service
P.O. Box 120053
Covington, KY 41012

Or, if using a private delivery service, send it to:

Internal Revenue Service
7940 Kentucky Drive, Stop 840F
Florence, KY 41042

You also may fax (yep, the IRS still uses this method) the form and attachments to the IRS at (855) 233-8558.

The IRS has a special online page with more on innocent spouse tax relief.

Injured tax spouse circumstances: You might, on the other hand, be an injured spouse if you file a joint tax return and all or part of your portion of a tax over payment is not refunded.

Instead, most or all of the tax money you expected to get back goes to cover your spouse's legally enforceable past-due federal or state tax bills, delinquent child or spousal support payments or other federal nontax debt, such as a student loan.

As an injured spouse, you might be able to get back your portion of the refund instead of having it go to pay for your deadbeat partner's legally required payments.

In this case, you need to file Form 8379, Injured Spouse Allocation (an excerpt shown below), to get back your share of the joint refund.

Click here for full PDF Form 8379. Instructions available here.

File Form 8379, which can be done electronically, as soon as you learn that all or part of your share of tax over payment was, or is expected to offset your spouse's legally enforceable past-due obligations.

You must file Form 8379 for each year that the injured spouse circumstances apply. You can file it with your joint tax return or amended joint tax return (Form 1040X), or you can file it afterwards by itself.

You also must file the form within three years from the due date of the original return (including extensions) or within two years from the date that you paid the tax that was later offset, whichever is later.

The bottom line is that an innocent spouse is married to someone who, on the couple's joint tax return, deliberately lied to the IRS to lower their tax bill. The innocent spouse had no idea this tax cheating was happening and Uncle Sam agrees that the in-the-dark partner shouldn't be held fully accountable for such spousal tax actions.

An injured spouse, on the other hand, is a wife or husband whom the IRS determines is not legally obligated to cover via tax over payments the debts of his or her spouse.

IRS efforts against spousal abuse: While filing for innocent or injured spouse relief works for many partners, for some it creates domestic abuse dangers.

In these cases, the IRS has taken steps to help protect potential abuse victims.

When a taxpayer files Form 8857, Request for Innocent Spouse Relief, the agency wants the worried filer to check the box in Part II of the form (line 10). It asks, "Is there any information you are afraid to provide on this form, but are willing to discuss?"

Checking this box will tell the IRS that the relief seeking filer has been an abuse victim and fears that innocent spouse consideration could produce retaliation.

The 8857 form also asks in Part V for additional information on the abusive situation that might have played a part in the tax situation.

Form 8857 Part V

Form 8857 instructions also cite a 2013 IRS revenue procedure that discusses how the IRS agency will take into account abuse and financial control by the innocent spouse's husband or wife in determining whether equitable relief is warranted. It also broadens the availability of refunds in cases involving deficiencies.

There's also a special IRS web page with more on the rights of taxpayers who are victims of domestic abuse.

Abusive spouse must be notified: One continuing concern by spouses seeking tax relief is that under current law, the IRS must notify the spouse (or ex) with whom the 1040 in question was filed when there's a request for relief by the other partner.

"There are no exceptions, even for victims of spousal abuse or domestic violence. We will inform your spouse or former spouse that you filed Form 8857 and will allow him or her to participate in the process. If you are requesting relief from joint and several liability on a joint return, the IRS must also inform him or her of its preliminary and final determinations regarding your requested relief."

However, the agency says it will keep your personal identifying information confidential.

"To protect your privacy, the IRS will not disclose your personal information (such as your current name, address, phone number(s), or information about your employer, your income, or your assets)."

But any other information you provide the IRS to help it decide on an innocent spouse request could be disclosed to the spouse or ex-spouse. In this case, the IRS says you should redact or black out personal information in the material you submit.

The IRS also tells filers of Form 8857 on the document itself (emphasis is by the IRS) that, "If you have concerns about your safety, please consider contacting the 24-Hour (Confidential) National Domestic Violence Hotline at 1-800-799-SAFE (7233), or 1-800-787-3224 (TTY), or 1-855-812-1001 (Video Phone Only for Deaf Callers) before you file this form."

Please get help and give help where able: Let me repeat the IRS' advice. If you're in an abusive relationship, jot those numbers down and use them. They are:

• 24-Hour (Confidential) National Domestic Violence Hotline at 1-800-799-SAFE (7233)
• TTY at 1-800-787-3224
• Video Phone Only for Deaf Callers at 1-855-812-1001 

I really hope that you never have to pick up the phone or pack up your children and belongings and leave. But your safety, as the COVID-19 situation has demonstrated, is paramount. Do not sacrifice it for anything or any person.

As for those of us in happier relationships or who are enjoying their single lifestyles, if your able to right now please consider helping out those who aren't as fortunate. Facilities that help domestic abuse victims also are, like all nonprofits, a tangential victim of the coronavirus crisis.

A financial gift to help shelters keep providing these critical services would definitely be welcome. Plus, it might be, thanks to recent coronavirus-inspired expansion of charitable donation tax options, a tax break for you next filing season.

You also might find these marriage related posts of interest:

• Wedding and other tax tips
• 6 tax tips for divorcing (or divorced) couples
• 6 signs married couples should consider separate tax returns 

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