Injured Spouse

[geekgirldany]

I haven't really done one of these in a long time.

I have clients that I am filing 08 and 09 taxes. Wife does not work, husband does. In 07 all the refund was taken to pay on her student loans (I did not prepare return). I told them that they could do either Injured Spouse or MFS. They will be getting back a large amount due to EIC.

I was reading on the forum here at some back posts. It looks like if you do Injured Spouse then the IRS decides how much of the refund they get back from the credits. But if the return is done MFS then will know the exact amount but EIC credit is lost.

Am I correct on this?

[erchess]

Yes

You are correct. However, EIC is not the only credit lost and MFS tax rates are higher than for other filing statuses.

[geekgirldany]

Yeah they are getting the CTC also. Well I guess I will tell them all we can do is injured spouse and see if they get back the refund I calculated. That it may be less because the IRS might reduce the credits.

Thanks

[PIGLEE]

By the way, TTB page15-5 states "A change from a joint return to a separate return after the due date is not allowed"

Yes IRS does calculate the refund on Injured Spouse, but if you live in a community property state, the IRS, does a split down the middle, no matter who earned the income.

[geekgirldany]

Thanks. I was just trying to decide which way would be most beneficial for them. Looks like Injured Spouse is the only way for them to possibly get the refundable tax credits. I am in GA so no community prop state.