- Injured spouse candidates must qualify. You must have paid federal income tax, claimed a refundable tax credit, or not be legally obligated to pay any past due debt.
- If you live in a community property state, special rules apply.
- If you filed a jointly and you are not the responsible party for the debt, you may apply to get your entitled portion.
- File Form 8379 along with your original form or by itself after you receive notice from IRS about the debt offset.
- Form 8379 can be filed electronically. If you file a paper tax form, you can include Form 8379 with it with the words “INJURED SPOUSE” at the top left corner. Your request will be processed before any offset occurs.
- If you are filing Form 8379 after the offset, both parties social security numbers must be on the form and the “injured spouse” must sign the form.
- Form 8857 is used for innocent spouse relief. There are limited circumstances in which this relief is given.
- You must give to a qualified organization for a legitimate tax deduction.
- You must file Form 1040 and itemize on Schedule A.
- Deduct only the amount that exceeds fair market value on benefits from contributions.
- Donations of stock or other non-cash property are valued at fair market value of the property.
- Fair market value is the price for property to change hands between willing parties.
- You must have bank records, payroll deduction or written communication to prove contribution.
- To claim deductions for more than $250, you must have proof of transaction as listed above.
- If you are donating something valued at more than $5000, you must also complete Section B of Form 8283. This form usually requires an appraisal by a qualified appraiser.
- You can file Form 8379 electronically. When filing a paper tax return, you can include the form with it. Write in big bold letters at the top left of your return, “INJURED SPOUSE” on Forms 1040, 1040A,or 1040EZ.
- If you are filing the Injured Spouse Form by itself, it must show both parties Social Security numbers in the same order as the return. The ”injured” spouse must sign the form.
- The IRS will compute what the injured spouse’s share will be.
- Follow all instructions on Form 8379 and attach all required forms to avoid delays. If you don’t receive a notice, contact the FMS, 1-800-304-3107.
- If you owe federal or state income taxes, any refund you may qualify for will be used to offset those liabilities. Other debt to be offset is child support an student loan. Your refund will be used to pay as much as needed and if there is any left over, the Financial Management Service (FMS) will refund the remainder.
- You will receive a notice if your refund will be offset. The notice will include the original refund amount, the amount offset and contact information for the agency who will be receiving the money.
- You should not contact the IRS if you believe that you do not owe that amount. Contact the agency in which the money went to.
- If you filed jointly and you are not responsible for that debt but you are entitled to a portion of the refund, Form 8379, Injured Spouse Allocation should be filed. Attach the form to your original filing, or send it alone after you have been notified of the offset.
Latest News
What Are Clergy-People’s Options for Housing?
Another tax benefit for clergy-people is that they receive a tax-free housing allowance. This allowance may be instead of or in addition to living in a church provided parsonage.
A parsonage allowance is a house or dwelling that is provided to the clergy-person as compensation for ministerial services. Most often the parsonages are controlled by the religious organization. Many clergy-people who live in these homes are not even aware that they are getting a tax break from this portion of their salary. it does not cost the church anything, but does provide a beg tax break for the minister. This parsonage allowance is the rent-free usage of the furnished home.
A housing allowance goes towards a rented home or apartment or a home owned by the minister. This expense is paid as part of their salary while performing ministerial services. The clergy-person will elect this option and church approves the total compensation as a housing allowance.
When reporting to the IRS:
- The allowance must be designated in advance.
- The allowance must only be used for housing-related expenses.
- The allowance may not exceed the fair rental value of the house.
A double deduction is a possibility for clergy-persons who own their own home and receives a housing allowance. House taxes and mortgage interest are included in housing allowances but they also may be able to be taken as itemized deductions. Talk to your tax service with any concerns regarding this or any other tax question you may have.
How Can Clergy Opt Out of Social Security?
Another great question from a Menifee Tax Service reader. If you or a family member are a clergy-person, this information will come in handy.
An important factor for clergy to remember before they opt out of Social Security is that once they do, they will not be eligible for any Social Security retirement benefits. If the clergy-person does decide to opt out, it must be done by their second year in which more than $400 had been earned in ministerial income. Form 4361 will need to be completed and filled out based on your religious denomination. If the IRS approves this exemption, only ministerial services are exempt from self-employment tax. It is clearly stated on the form that once the exemption is approved, the status cannot be revoked, so be certain to discuss this option with your financial planner.
Rules to follow:
- File Form 4361
- State that they are conscientiously opposed to public insurance which includes that of the Social Security Act.
- State their desire to opt out based on religious denomination or because it goes against religious principles and/or beliefs.
- Economic reasons are NOT an option for opting out.
- The clergy must inform the religious institution which ordained, licensed or commissioned them that they are against public insurance.
- The same institution which ordained, licensed or commissioned the clergy-person must be a tax-exempt religious organization. This organization must be a church, convention or n association of churches.
Once the IRS approves the tax exempt status, a notification will be sent and must be signed and returned by the clergy-person for verification.
Special Tax Treatment for Clergy
There are specific tax benefits that are given to clergy-people. Congress recognizes the value of clergy and religious workers. They are looked upon as self-employed for Social Security and Medicare tax reasons. Since they are considered self-employed the institution they work for cannot withhold Social Security of Medicare tax from their paychecks. There is the option for clergy to opt to have additional taxes withheld to cover the self-employment tax. There are clergy who choose to be covered by Social Security and they are still considered self-employed. Most clergy could also be eligible for the Earned Income Tax Credit.
If you are a clergy-person and are looking to understand your tax status more completely, you can call Murrieta Tax Service for further information.
New E-File Software Causing Delays
The IRS and their new software system is to blame for many delays in tax payers refund. Congress is expected to investigate this problem. Many preparers and firms who filed for tax payers have been getting the brunt of the calls, but their actions had nothing to do with the delays. You may want to call questioning updated information with the problem, but ask politely, this error has created many problems for them as well. Tax Preparers Temecula will do their best to keep you informed with the status of any delays.
The IRS is having glitches with their new electronic tax return system. The problems started showing up in February with several million taxpayers’ tax returns taking longer to be returned. On a good note, the IRS has caught up with the delays and is on track with their processing as compared to last year’s progress. Taxpayers can expect to continue to get their returns within a short period time as projected.
The IRS has suggested that tax preparers send in e-files through the old system as they continue to make the new technology platform upgraded system more proficient.