More frequently asked questions regarding the Economic Stimulus Payment (Rebate): What if my spouse owes money? What will happen to our stimulus payment? Will the IRS keep it all even though part of that money is for me and my children?
The IRS Will Keep Your Money
The IRS can keep your stimulus money (and tax refund) if you owe money to the government. The IRS will shoot first and ask questions later. So if your spouse owes money to the government and you file jointly, the IRS can/will take out the money it's owed before sending your refund or payment.
Keep this in mind if you are married filing jointly. The IRS can claim the tax return and economic stimulus payments to pay off government debts and child support. The government debts include back taxes, student loans and even state taxes. The IRS will take out money for back child support.
The IRS will only take out the money if your are behind or past due. So if you are paying on your student loans and you are current (up to date) on the payments, you have nothing to worry about. Also if you are making child support payments the IRS won't take your money. Again, the IRS will only claim your money if you are past due or if you owe back taxes.
My Spouse Owes the Debt Not Me
The IRS has a special form for this: Form 8379 – Injured Spouse Allocation. The government recognizes that your spouse my owe the money, not you. In this case you can apply for the injured spouse allocation. Essentially, it lets you get back your money from the IRS. However, getting the money back can take some time.
Will the IRS Let Me Know if They Took My Money?
Yes. You should receive a letter from the IRS detailing the amount that was deducted and why. See the quote from the IRS web site below.
What About Child Support?
Please see my previous article on the stimulus package, taxes and child support for information. You can also check out this article on the stimulus payment from the US Government's Office of Child Support Enforcement.
What the IRS Says
Here are some questions and answers from the IRS stimulus payment site. I've reproduced them here as the IRS stimulus site is changing constantly.
Q. How will I be notified if my stimulus payment was used to offset an outstanding debt?
A. If this occurs, you will receive a letter explaining how the stimulus payment was applied. [New 4/11/08]
Q. I am filing a joint tax return with my spouse who has a past-due obligation. How can I ensure that I still get my share of our joint stimulus payment?
A. In this situation, you are considered an injured spouse. To get your share of a joint income-tax refund, as well as your share of the stimulus payment, you can file Form 8379, Injured Spouse Allocation. You will get your share of these payments, and your spouse’s share will be applied to his or her past-due federal or state income taxes or non-tax federal debt such as student loans and child support. Your allocation request will be processed more quickly if you attach Form 8379 to your regular 2007 federal income tax return. [New 3/25/08]
Q. How will the IRS treat a stimulus payment when there is an innocent spouse involved?
A. An innocent spouse determination for a 2007 income tax return would follow the filing of the return. In most instances, the stimulus payment will be issued before such a claim is filed and before a determination can be made. [New 4/14/08]