Tax refund reduced to cover past due tax bill

In My Humble Opinion
1

I was looking forward to the biggest tax refund I’ve ever gotten, thanks to getting married last year. After filing my taxes via TurboTax (which I have done since 2006), I was entitled to a refund of $1,805. My filing status was “Married, filing jointly”.

When the refund didn’t arrive within the expected timeframe, I used the IRS “where’s my refund?” tool, where I discovered that my refund has been reduced to something like $834 because of a past due tax bill.

WTF?

I assume the IRS will be sending me a letter to explain this in more detail. In the meantime, I’d love to hear some ideas.

As far as my own tax history, I will confess that, some time between 1990 and 1992 I waited until shortly before April 15 to figure my taxes, and discovered that I somehow owed about $150. Being young and stupid and mostly drunk when I wasn’t at work, and not having $150, I blew it off and simply didn’t file my taxes that year. I never heard a thing about it from the IRS.

I’m think that this refund reduction is probably not related to that because:

a) Why would they wait 25-27 years to come after me, and even if they did

b) I would think that the penalties and accrued interest after all this time would add up to more than 900-something dollars.

So it must be connected to the fact that this is the first time I’ve filed as Married, and maybe my wife had some past due tax bill. But she claims to have always gotten a refund when she filed in the past. She hasn’t worked for the last 3-4 years due to disability, and so hasn’t had to file a return at all for a few years.

My wife was married twice previously. Could this be related to one of her exes’ old tax returns from when they were married, and she’s being held liable somehow?

Ideas?

2

Based on some of the things you’ve said about the two of you, I’d say it may be any combination of some or all of the above.

3

Since the amount of information available is insufficient to answer the question, this one is moved to IMHO.

samclem, moderator.

4

It’s almost certainly related to a return from the last 7 years that has your wife’s (purported or real) signature on it. Good luck getting the IRS to say which return or year, when it happened to us about 8 years ago we asked for an explanation and they essentially said, ‘Look back into your own records and figure it out or hire a lawyer to pursue this further w/ us.’

5

Wow, really? So the IRS can say “You owe us more money” without a shred of proof to back them up?

6

I certainly hope that you are not taking your wife’s statements at face value.

Can you examine her records? I’d start there.

7

They will. My idea is that your wife has not been entirely forthcoming with you about her past taxes.

8

If it turns out to be your wife’s bill, file for injured spouse relief to get your share of the refund.

9

Accountant who’s done tax prep here.

A couple things jump out at me:

You’ve mentioned that she wasn’t married to all of her exes. If she filed as married, and wasn’t, that’s fraud; IN GENERAL (don’t get me started on the specifics) filing as married gets better returns than filing as single and the IRS doesn’t like people fibbing in the hopes of getting a better refund.

If she gets alimony from any of them, that’s taxable income.

I think you’ve mentioned she works as a home health nurse or something? If she was getting paid and not reporting it, or taking cash under the table to avoid paying taxes on it, the IRS isn’t going to like it if they find out.

You don’t say what kind of disability she’s on, but assuming it’s SSDI those payments are not taxable unless: half of SSDI benefits + any taxable income > yearly minimum, which for 2016 is $10,350. If she hit that minimum in any of the years she didn’t file, the IRS, big surprise, doesn’t like that.

Plus, I’ll nth the posters who are saying you ought to take her claims with a very large grain of salt, given her past history.

10

Did you have qualifying insurance? Might the difference be the PPACA penalty for not having qualifying insurance? Or perhaps you had insurance or were otherwise exempt from the penalty but did not properly fill out that part of the form(s)?

11

It’s more like if you think they made a mistake, the burden of proof is on you. They are a big govenment agency, and they don’t like to give up money once they have it in hand, or to admit it when they botch something up.

12

We had this happen to us, and we were sent a letter that said exactly what tax year we owed money on and the exact amount. I imagine you’ll get such a letter soon.

In all honesty, we’ve had very good luck working with IRS agents to clear things up and get help. It may take a long time to get them on the line, but most have been very helpful once you do.

13

She was married twice before, and has had some boyfriends afterward, but I haven’t asked for details.

When she was working steadily, she worked in oncology. She recently tried to get some home health care work, but that … didn’t work out.

She gets a very small disability payment from the state. She’s been unsuccessful in getting SSDI. Her disability is PTSD and severe anxiety due to a sexual assault and physical/mental/emotional abuse in her previous marriages. Apparently that kind of disability is much harder to prove than a physical disability.

My wife had coverage all year. I had coverage for most of the year, but due to a miscommunication and the fact that my union didn’t send me the 1095-B form until three weeks after I’d filed my taxes, I actually claimed fewer months of coverage than I was entitled to.

14

I suggest you ask your wife if she has any of those tax files – you’ll probably need them, as well as your own.

15

Of course not.

Yep, or something similar. Obviously.

Something like that happened to a friend of mine. His new wife had some outstanding student loans that she hadn’t been paying and he wasn’t made aware of them. I guess that she thought that they’d just go away or something. So it could be some kind of other debt too rather than back taxes.

Mister Rik, you’re screwed, Dude.

16

If she’s had a debt written off it can incur a 1099. That could have pushed her past the threshold into owing taxes. If she’s moved around a bit in the last few years it might not have reached her or it did and she did not realize she now owed taxes when she didn’t expect to.
It can’t hurt to buy a stamp and request the last several years of tax transcripts from the IRS, last I looked they don’t charge for them.

17

last year, we did married filing jointly for the first time.

We got back over 3 grand from the IRS, we were waiting for another 2 from the state. After a while, we contacted H&R Block. They informed us that the State took it for an overdue bill in my new wife’s past. The agent informed us that we got lucky when the State didn’t take the Federal refund also.

18

I just noticed this. Now is the time to ask for those details. Unless you want to face an audit, dude. BTW, did you check your credit like people suggested?

19

An audit isn’t going to happen. They aren’t exactly in the demographic where it would be worth the time of the IRS to do one. There is a lien for something and they are getting their money back automatically. This is a common occurrence.

20

Well that’s good to know. But I imagine he should still get all of this information, just for future references.