Injured Spouse Relief
Not to be confused with Innocent Spouse Relief, Injured Spouse Relief applies when on spouse enters a marriage with a tax liability that was incurred prior to the marriage. Generally, if one spouse owes a tax liability, and the couple files jointly, both spouses portion of the refund will be taken by the IRS to pay the pre-marriage tax liability of the spouse. Injured Spouse Relief allows the spouse that is not responsible for the pre-marriage tax liability to receive their portion of the refund.
This does NOT mean the spouse that is not responsible for the liability gets half of the refund. The IRS hypothetically calculates the refund of both parties had they filed separately. The IRS combines these refunds and determines which percentage of the total it allocable to each spouse. This percentage is applied to the joint refund to determine the portion the non-liable spouse will receive as a refund.
Injured Spouse Relief is a great option for couples that were recently married, and one had an outstanding tax liability coming into the marriage. Instead of filing separately to receive some refund, the non-liable spouse can receive a larger refund associated with the credits and deductions allowed when filing jointly.