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MFS or MFJ with Injured Spouse?

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    #1

    MFS or MFJ with Injured Spouse?

    My client is trying to do an OIC for back taxes. In the midst of it, he got married last summer.

    Filing MFJ would be best for all, but with the back taxes, they are afraid the IRS will grab her refund OR they will not approve his OIC.

    Just wondering, how would you counsel this couple? MFJ? MFS? MFJ with injured spouse? I don't want to jeopardize his offer in compromise.
    "I am proud to pay taxes in the United States. The only thing is I could be just as proud for half the money." Arthur Godfrey
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    #2
    Injured Spouse

    I'm not sure it really makes a difference.

    I don't have a lot of experience with OIC. So I'm not really qualified to render advice on this matter.

    But here are my thoughts anyway

    Maybe your client should do nothing. Hold off, and file an extension if necessary, to see if the OIC gets approved.

    What concerns me most is not whether they take her refund, or whether they should file MFS, or MFJ, with or without an injured spouse claim.

    What concerns me is that it sounds like the OIC was filed when he was single, and now he's married.

    I'm not talking about his filing status. I'm talking about his marital status.

    Even though his wife is not liable for the tax debt in question, the IRS may well be required to look at all household income and expenses when they evaluate an OIC.

    The taxpayer may have a duty to disclose to the IRS the fact that there has been a material change in his situation since he filed the OIC.

    Someone with more experience with OIC may want to weigh in on this question.

    Are you representing this guy in connection with the OIC? If so, you may need to be very careful.

    BMK
    Burton M. Koss
    koss@usakoss.net

    ____________________________________
    The map is not the territory...
    and the instruction book is not the process.

    Comment

      #3
      Not me...

      I never get involved in OIC. I tried once, and that was enough for me. I spent countless hours for nothing. I have a client now who should qualify for moving his debt into uncollectible status. He is working on the paperwork now. We will see if that works for him. Different situation all together.
      But this guy, he just didn't pay his taxes, it caught up with him, then he was in a head on collision and couldn't work. He's back to work, walks with a cane, but is back to work.
      I wondered if the IRS might need to work with the wife's income. He won't be happy.
      I don't think he is allowed to file an extension with the OIC. And he owes again.
      I think I'll file MFS and be done with it. Mainly because I don't want them saying that the wife's income was scrutinized because of my decision to file MFJ.
      "I am proud to pay taxes in the United States. The only thing is I could be just as proud for half the money." Arthur Godfrey

      Comment

        #4
        Possi - It is my position that it is not your decision to make as to how to file. It is their return and final responsibility as to how to file. I would provide them with all the facts that I could (and document) but they must make the decision.

        LT
        Only in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".

        Comment

          #5
          I know

          Oh, I know, but I just want to give them the very best advise. Thanks~~
          "I am proud to pay taxes in the United States. The only thing is I could be just as proud for half the money." Arthur Godfrey

          Comment

            #6
            The IRS will look at the wifes income in order to consider her contribution to the household support. This will reduce the amount of his allowable expense exposing more of his income to be used in the available resource calculation. I had one of these a couple of years ago. I told them they couldn't get married till after we submitted the offer but of course they didn't listen. It greatly complicated the offer but in the end we got it thorough. I do about 1 per year but certainly don't go looking for the work or hold myself out as any sort of expert on it.
            In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
            Alexis de Tocqueville

            Comment

              #7
              He owes

              Since he owes this year, I would like to get it filed asap.
              They had to get married b/c his ex was making a stink about their kids being exposed to the sinful environment they created by living together.
              geeeez
              "I am proud to pay taxes in the United States. The only thing is I could be just as proud for half the money." Arthur Godfrey

              Comment

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