Author Topic: Judgment against my wife...can they take my tax return?  (Read 1879 times)

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mcflytrap

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Judgment against my wife...can they take my tax return?
« on: December 30, 2011 06:51:28 AM »
Hello all...

I'm new here and have been doing some major credit repair in the past couple years.  I went from having about 8 accounts into collections to 0 (negotiated w/ collectors) and now have a credit score in the mid 600s...even bought a house last year w/ a 4.5% fixed mortgage.  I'm on the right track.....however....

My wife has a credit card in her name only (the card was issued before we were married).  She has a judgment against her.  The collector even took $50 from a bank account that we rarely used.  Last year, we received a letter saying they were going to take her tax return...at least, that's what it seemed like they were saying.  So I'm all paranoid thinking I have to file separately to avoid them taking it....which means I lose money by filing separately.

Can they take my tax return if we file jointly?  My wife does not work outside the home (she's a stay-at-home mom), so they can't take her wages.  I'm paranoid that they will one day the money out of my bank account (recently changed banks but still worries me)....but now that tax season is coming, I'm concerned about this.

Anybody have any helpful answers?

My plan is to make a deal and get this thing paid in the next few months.  I'm hoping the collector will work w/ me seeing as my wife gets no income.  Anyway, thoughts?

Flyingifr

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Re: Judgment against my wife...can they take my tax return?
« Reply #1 on: December 30, 2011 09:03:19 AM »
Tax refunds cannot be intercepted for credit card debt. They can be intercepted for student loans, child support, alimony and debts to the Federal and State governments.

That's the good news. The bad news is the second the tax refund hits the bank, it is fair game for any bill collector who knows where to look.

The good news is that since you do not owe the debt, you can have your refunds direct deposited into YOUR bank account (does not have to be a joint account and in fact it shouldn't be a joint account) and then the tax refunds are safe from ordinary creditors.

Since your wife has no income, why pay them at all? They can grab any bank account with her name on it, but cannot touch any bank account that does not have her name on it.
BTW-the Flyingifr Method does work. (quoted from Hannah on Infinite Credit, September 19, 2006)

I think of a telephone as a Debt Collector's crowbar. With such a device it is possible to pry one's mouth open wide enough to allow the insertion of a foot or two.

Morality of Debt? No one ever went to the Nether Regions for not paying a debt.

Founder of the Credit Terrorist Training Camp (Debtorboards)

mcflytrap

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Re: Judgment against my wife...can they take my tax return?
« Reply #2 on: December 30, 2011 05:53:56 PM »
Thanks for the info!  This is what I was reading on the internet, but I wanted to make sure it was correct.

I would like to pay off the debt as soon as I can because I'm trying to rebuild my wife's credit.  If anything were to happen to me, she would get a nice life insurance payout, but her credit would be so shot that she wouldn't be able to take out any loans or anything if she needed.  The sooner I get her debt taken care of, the sooner we can start to rebuild it....it's important to us.

Thanks again.


samir

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Re: Judgment against my wife...can they take my tax return?
« Reply #3 on: December 30, 2011 07:21:10 PM »
Just to make distinctions. Flyingfer, is the expert, but in states like MI the law allow them to intercept your state income tax.   

mcflytrap

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Re: Judgment against my wife...can they take my tax return?
« Reply #4 on: December 30, 2011 11:33:21 PM »
Ooh, that's the problem.  Our Federal return isn't going to be very big, but our state return is what is going to give us the money.  If I file separate, I lose my wife's deduction which is a lot of money.  Any suggestions?

Fighting Irish

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Re: Judgment against my wife...can they take my tax return?
« Reply #5 on: December 30, 2011 11:38:58 PM »
Once more: put it in an account in JUST your name.

Dang it, Jim! I'm a nurse, not an attorney!

(The rest of you, keep that in mind, too.)

mcflytrap

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Re: Judgment against my wife...can they take my tax return?
« Reply #6 on: December 31, 2011 12:32:32 AM »
Once more: put it in an account in JUST your name.

I understand that.  But I'm being told that in Michigan they can intercept our state return before it hits the bank.  According to Michigan's website, if the debt is only for one of us and we file jointly, they will put the return on hold and I will have to fill out a "Non-Obligated Spouse Form".

Excerpt:
Quote
  Purpose of the Income Allocation for Non-Obligated Spouse Form 743
The form is used when the Michigan Department of Treasury holds a joint income tax refund or homestead property tax credit payment for an amount owed by one spouse for the following:
-    Taxes,
-    Other debts to the state, (e.g. Driver Responsibility, Probation fees, etc.)
-    Child support owed to the Friend of the Court,
-    Internal Revenue Service levy, or
-    A garnishment or court order.

The form is used to divide the refund amount between both spouses and designate how much of the joint refund can be applied to the debt(s). When both spouses have a debt, each spouse's share of the refund is applied to his/her debt.

Flyingifr

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Re: Judgment against my wife...can they take my tax return?
« Reply #7 on: December 31, 2011 12:38:31 AM »
Just to make distinctions. Flyingfer, is the expert, but in states like MI the law allow them to intercept your state income tax.   

While some States do allow for State tax refunds to be offset for civil debt (MI is one of them), there are certain procedural safeguards in place. I will use Michigan's as an example because (a) it is typical and (b) it is the State that was mentioned.

First, I refer you to this web site: http://www.michigan.gov/taxes/0,1607,7-238-43513_44135-156357--,00.html#garnishment

It is the Michigan Department of Taxation and what they say is official.

First, they cannot take the refund without notifying you in advance. Michigan requires the State Tax Department to send you a "Request for Information Notice" and, more importantly, a form titled "Income Allocation For Non-Obligated Spouse (Form NOS-743)". This form is similar to IRS Form 8379 Injured Spouse Allocation. While they can take any refund attributed to the Obligated Spouse, they cannot take any refund attributed to the Non-Obligated Spouse. These forms allow you to recalculate your refund and attribute it to each spouse separately without you losing the benefits of filing Jointly.

Back to the OP's issue: Since your spouse has no income, none of the refund can be attributed to her. Therefore, even if they do file a lien against your State Tax Refund, they can't get any of it, since all payments of the tax were made by you. Fill out the form, send it in and thumb your nose at the creditor.
« Last Edit: December 31, 2011 12:45:55 AM by Flyingifr »
BTW-the Flyingifr Method does work. (quoted from Hannah on Infinite Credit, September 19, 2006)

I think of a telephone as a Debt Collector's crowbar. With such a device it is possible to pry one's mouth open wide enough to allow the insertion of a foot or two.

Morality of Debt? No one ever went to the Nether Regions for not paying a debt.

Founder of the Credit Terrorist Training Camp (Debtorboards)

Flyingifr

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Re: Judgment against my wife...can they take my tax return?
« Reply #8 on: December 31, 2011 12:40:15 AM »
I understand that.  But I'm being told that in Michigan they can intercept our state return before it hits the bank.  According to Michigan's website, if the debt is only for one of us and we file jointly, they will put the return on hold and I will have to fill out a "Non-Obligated Spouse Form".

You have a choice to make - fill out the form and get your refund or don't fill out the form and don't get your refund.
BTW-the Flyingifr Method does work. (quoted from Hannah on Infinite Credit, September 19, 2006)

I think of a telephone as a Debt Collector's crowbar. With such a device it is possible to pry one's mouth open wide enough to allow the insertion of a foot or two.

Morality of Debt? No one ever went to the Nether Regions for not paying a debt.

Founder of the Credit Terrorist Training Camp (Debtorboards)

mcflytrap

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Re: Judgment against my wife...can they take my tax return?
« Reply #9 on: December 31, 2011 12:43:30 AM »
Back to the OP's issue: Since your spouse has no income, none of the refund can be attributed to her. Therefore, even if they do file alien against your State Tax Refund, they can't get any of it, since all payments of the tax were made by you.

Thanks, Flyingifr...this is how I was interpreting the website, but I wanted a more educated interpretation of it.  At first it didn't make sense to me to fill the "Non-Obligated Spouse" form as my return will clearly state that my wife had no income...seems redundant to me.  But whatever.

I will file jointly and follow this path, if need be.

Flyingifr

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Re: Judgment against my wife...can they take my tax return?
« Reply #10 on: December 31, 2011 12:48:49 AM »
Thanks, Flyingifr...this is how I was interpreting the website, but I wanted a more educated interpretation of it.  At first it didn't make sense to me to fill the "Non-Obligated Spouse" form as my return will clearly state that my wife had no income...seems redundant to me.  But whatever.

I will file jointly and follow this path, if need be.

The purpose of the Nonobligated Spouse form is to show Michigan (or the IRS or whatever Government Agency you are dealing with) just whose refund it is. If you don't file the form they WILL take the entire amount.
BTW-the Flyingifr Method does work. (quoted from Hannah on Infinite Credit, September 19, 2006)

I think of a telephone as a Debt Collector's crowbar. With such a device it is possible to pry one's mouth open wide enough to allow the insertion of a foot or two.

Morality of Debt? No one ever went to the Nether Regions for not paying a debt.

Founder of the Credit Terrorist Training Camp (Debtorboards)

mcflytrap

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Re: Judgment against my wife...can they take my tax return?
« Reply #11 on: December 31, 2011 01:08:43 AM »
I understand now.  I was thinking our return itself would show I had all the income, and my wife had none....hence why I thought the form was redundant.  But the joint return will only show the total income for both of us, thus needing the form for the state of Michigan to be able to tell who made how much money.

Thanks again.

Fighting Irish

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Re: Judgment against my wife...can they take my tax return?
« Reply #12 on: December 31, 2011 03:47:34 AM »
You're half right. The return does show that the income is earned by you.

But once the refund has been calculated, the computer is no longer looking at the return. It's then up to you to demonstrate that none of the refund is attributed to income that she's earned.
Dang it, Jim! I'm a nurse, not an attorney!

(The rest of you, keep that in mind, too.)

Flyingifr

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Re: Judgment against my wife...can they take my tax return?
« Reply #13 on: December 31, 2011 04:23:07 AM »
I understand now.  I was thinking our return itself would show I had all the income, and my wife had none....hence why I thought the form was redundant.  But the joint return will only show the total income for both of us, thus needing the form for the state of Michigan to be able to tell who made how much money.

Thanks again.

You are assuming intelligence in a Governmental agency - a BAAAD assumption.
BTW-the Flyingifr Method does work. (quoted from Hannah on Infinite Credit, September 19, 2006)

I think of a telephone as a Debt Collector's crowbar. With such a device it is possible to pry one's mouth open wide enough to allow the insertion of a foot or two.

Morality of Debt? No one ever went to the Nether Regions for not paying a debt.

Founder of the Credit Terrorist Training Camp (Debtorboards)